x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 42-1579325 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
2021 Spring Road, Suite 200, Oak Brook, Illinois | 60523 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) | Emerging growth company o |
June 30, 2017 | December 31, 2016 | |||||||
Assets | ||||||||
Investment properties: | ||||||||
Land | $ | 1,141,172 | $ | 1,191,403 | ||||
Building and other improvements | 4,023,200 | 4,284,664 | ||||||
Developments in progress | 28,254 | 23,439 | ||||||
5,192,626 | 5,499,506 | |||||||
Less accumulated depreciation | (1,363,604 | ) | (1,443,333 | ) | ||||
Net investment properties | 3,829,022 | 4,056,173 | ||||||
Cash and cash equivalents | 28,003 | 53,119 | ||||||
Accounts and notes receivable (net of allowances of $6,938 and $6,886, respectively) | 71,588 | 78,941 | ||||||
Acquired lease intangible assets, net | 131,092 | 142,015 | ||||||
Assets associated with investment properties held for sale | 44,087 | 30,827 | ||||||
Other assets, net | 160,531 | 91,898 | ||||||
Total assets | $ | 4,264,323 | $ | 4,452,973 | ||||
Liabilities and Equity | ||||||||
Liabilities: | ||||||||
Mortgages payable, net | $ | 355,239 | $ | 769,184 | ||||
Unsecured notes payable, net | 695,441 | 695,143 | ||||||
Unsecured term loans, net | 646,554 | 447,598 | ||||||
Unsecured revolving line of credit | 182,000 | 86,000 | ||||||
Accounts payable and accrued expenses | 65,093 | 83,085 | ||||||
Distributions payable | 38,318 | 39,222 | ||||||
Acquired lease intangible liabilities, net | 102,720 | 105,290 | ||||||
Liabilities associated with investment properties held for sale | 1,142 | 864 | ||||||
Other liabilities | 75,339 | 74,501 | ||||||
Total liabilities | 2,161,846 | 2,300,887 | ||||||
Commitments and contingencies (Note 14) | ||||||||
Equity: | ||||||||
Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative redeemable preferred stock, 5,400 shares issued and outstanding as of June 30, 2017 and December 31, 2016; liquidation preference $135,000 | 5 | 5 | ||||||
Class A common stock, $0.001 par value, 475,000 shares authorized, 230,943 and 236,770 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 231 | 237 | ||||||
Additional paid-in capital | 4,853,680 | 4,927,155 | ||||||
Accumulated distributions in excess of earnings | (2,752,648 | ) | (2,776,033 | ) | ||||
Accumulated other comprehensive income | 1,209 | 722 | ||||||
Total equity | 2,102,477 | 2,152,086 | ||||||
Total liabilities and equity | $ | 4,264,323 | $ | 4,452,973 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Rental income | $ | 106,017 | $ | 115,194 | $ | 215,991 | $ | 230,454 | ||||||||
Tenant recovery income | 29,524 | 29,654 | 60,310 | 60,010 | ||||||||||||
Other property income | 1,798 | 2,378 | 4,731 | 5,401 | ||||||||||||
Total revenues | 137,339 | 147,226 | 281,032 | 295,865 | ||||||||||||
Expenses | ||||||||||||||||
Operating expenses | 21,004 | 20,092 | 42,868 | 43,153 | ||||||||||||
Real estate taxes | 21,487 | 21,090 | 43,366 | 41,029 | ||||||||||||
Depreciation and amortization | 52,325 | 53,443 | 105,799 | 106,839 | ||||||||||||
Provision for impairment of investment properties | 13,034 | 4,142 | 13,034 | 6,306 | ||||||||||||
General and administrative expenses | 10,370 | 10,773 | 21,583 | 22,179 | ||||||||||||
Total expenses | 118,220 | 109,540 | 226,650 | 219,506 | ||||||||||||
Operating income | 19,119 | 37,686 | 54,382 | 76,359 | ||||||||||||
Gain on extinguishment of debt | — | — | — | 13,653 | ||||||||||||
Gain on extinguishment of other liabilities | — | 6,978 | — | 6,978 | ||||||||||||
Interest expense | (21,435 | ) | (25,977 | ) | (106,967 | ) | (52,741 | ) | ||||||||
Other income, net | 451 | 302 | 456 | 427 | ||||||||||||
(Loss) income from continuing operations | (1,865 | ) | 18,989 | (52,129 | ) | 44,676 | ||||||||||
Gain on sales of investment properties | 116,628 | 9,613 | 157,792 | 31,352 | ||||||||||||
Net income | 114,763 | 28,602 | 105,663 | 76,028 | ||||||||||||
Preferred stock dividends | (2,363 | ) | (2,363 | ) | (4,725 | ) | (4,725 | ) | ||||||||
Net income attributable to common shareholders | $ | 112,400 | $ | 26,239 | $ | 100,938 | $ | 71,303 | ||||||||
Earnings per common share – basic and diluted | ||||||||||||||||
Net income per common share attributable to common shareholders | $ | 0.48 | $ | 0.11 | $ | 0.43 | $ | 0.30 | ||||||||
Net income | $ | 114,763 | $ | 28,602 | $ | 105,663 | $ | 76,028 | ||||||||
Other comprehensive (loss) income: | ||||||||||||||||
Net unrealized (loss) gain on derivative instruments (Note 9) | (145 | ) | (510 | ) | 487 | (477 | ) | |||||||||
Comprehensive income attributable to the Company | $ | 114,618 | $ | 28,092 | $ | 106,150 | $ | 75,551 | ||||||||
Weighted average number of common shares outstanding – basic | 234,243 | 236,716 | 235,269 | 236,647 | ||||||||||||
Weighted average number of common shares outstanding – diluted | 234,818 | 236,902 | 235,842 | 236,781 |
Preferred Stock | Class A Common Stock | Additional Paid-in Capital | Accumulated Distributions in Excess of Earnings | Accumulated Other Comprehensive (Loss) Income | Total Shareholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||
Balance as of January 1, 2016 | 5,400 | $ | 5 | 237,267 | $ | 237 | $ | 4,931,395 | $ | (2,776,215 | ) | $ | (85 | ) | $ | 2,155,337 | |||||||||||||
Cumulative effect of accounting change | — | — | — | — | 17 | (17 | ) | — | — | ||||||||||||||||||||
Net income | — | — | — | — | — | 76,028 | — | 76,028 | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (477 | ) | (477 | ) | |||||||||||||||||||
Distributions declared to preferred shareholders ($0.875 per share) | — | — | — | — | — | (4,725 | ) | — | (4,725 | ) | |||||||||||||||||||
Distributions declared to common shareholders ($0.33125 per share) | — | — | — | — | — | (78,631 | ) | — | (78,631 | ) | |||||||||||||||||||
Issuance of common stock, net of offering costs | — | — | — | — | (2 | ) | — | — | (2 | ) | |||||||||||||||||||
Issuance of restricted shares | — | — | 269 | — | — | — | — | — | |||||||||||||||||||||
Stock-based compensation expense, net of forfeitures | — | — | (6 | ) | — | 3,702 | — | — | 3,702 | ||||||||||||||||||||
Shares withheld for employee taxes | — | — | (147 | ) | — | (2,159 | ) | — | — | (2,159 | ) | ||||||||||||||||||
Balance as of June 30, 2016 | 5,400 | $ | 5 | 237,383 | $ | 237 | $ | 4,932,953 | $ | (2,783,560 | ) | $ | (562 | ) | $ | 2,149,073 | |||||||||||||
Balance as of January 1, 2017 | 5,400 | $ | 5 | 236,770 | $ | 237 | $ | 4,927,155 | $ | (2,776,033 | ) | $ | 722 | $ | 2,152,086 | ||||||||||||||
Net income | — | — | — | — | — | 105,663 | — | 105,663 | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 487 | 487 | |||||||||||||||||||||
Distributions declared to preferred shareholders ($0.875 per share) | — | — | — | — | — | (4,725 | ) | — | (4,725 | ) | |||||||||||||||||||
Distributions declared to common shareholders ($0.33125 per share) | — | — | — | — | — | (77,553 | ) | — | (77,553 | ) | |||||||||||||||||||
Shares repurchased through share repurchase program | — | — | (6,024 | ) | (6 | ) | (75,691 | ) | — | — | (75,697 | ) | |||||||||||||||||
Issuance of restricted shares | — | — | 285 | — | — | — | — | — | |||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | 3,549 | — | — | 3,549 | |||||||||||||||||||||
Shares withheld for employee taxes | — | — | (88 | ) | — | (1,333 | ) | — | — | (1,333 | ) | ||||||||||||||||||
Balance as of June 30, 2017 | 5,400 | $ | 5 | 230,943 | $ | 231 | $ | 4,853,680 | $ | (2,752,648 | ) | $ | 1,209 | $ | 2,102,477 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 105,663 | $ | 76,028 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 105,799 | 106,839 | |||||
Provision for impairment of investment properties | 13,034 | 6,306 | |||||
Gain on sales of investment properties | (157,792 | ) | (31,352 | ) | |||
Gain on extinguishment of debt | — | (13,653 | ) | ||||
Gain on extinguishment of other liabilities | — | (6,978 | ) | ||||
Amortization of loan fees and debt premium and discount, net | 5,871 | 3,187 | |||||
Amortization of stock-based compensation | 3,549 | 3,702 | |||||
Premium paid in connection with defeasance of mortgages payable | 59,968 | — | |||||
Payment of leasing fees and inducements | (9,757 | ) | (5,967 | ) | |||
Changes in accounts receivable, net | 4,094 | (1,655 | ) | ||||
Changes in accounts payable and accrued expenses, net | (15,577 | ) | (11,410 | ) | |||
Changes in other operating assets and liabilities, net | 11,388 | 834 | |||||
Other, net | (63 | ) | 893 | ||||
Net cash provided by operating activities | 126,177 | 126,774 | |||||
Cash flows from investing activities: | |||||||
Changes in restricted escrows, net | 17,662 | 1,769 | |||||
Purchase of investment properties | (99,434 | ) | (261,877 | ) | |||
Capital expenditures and tenant improvements | (31,629 | ) | (30,216 | ) | |||
Proceeds from sales of investment properties | 312,916 | 41,031 | |||||
Investment in developments in progress | (8,612 | ) | — | ||||
Other, net | — | 194 | |||||
Net cash provided by (used in) investing activities | 190,903 | (249,099 | ) | ||||
Cash flows from financing activities: | |||||||
Principal payments on mortgages payable | (38,571 | ) | (12,679 | ) | |||
Proceeds from unsecured term loans | 200,000 | — | |||||
Proceeds from unsecured revolving line of credit | 474,000 | 325,000 | |||||
Repayments of unsecured revolving line of credit | (378,000 | ) | (120,000 | ) | |||
Payment of loan fees and deposits | (10 | ) | (6,043 | ) | |||
Purchase of U.S. Treasury securities in connection with defeasance of mortgages payable | (439,403 | ) | — | ||||
Distributions paid | (83,182 | ) | (83,333 | ) | |||
Shares repurchased through share repurchase program | (75,697 | ) | — | ||||
Other, net | (1,333 | ) | (2,256 | ) | |||
Net cash (used in) provided by financing activities | (342,196 | ) | 100,689 | ||||
Net decrease in cash and cash equivalents | (25,116 | ) | (21,636 | ) | |||
Cash and cash equivalents, at beginning of period | 53,119 | 51,424 | |||||
Cash and cash equivalents, at end of period | $ | 28,003 | $ | 29,788 | |||
(continued) |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Supplemental cash flow disclosure, including non-cash activities: | |||||||
Cash paid for interest, net of interest capitalized | $ | 41,017 | $ | 46,695 | |||
Distributions payable | $ | 38,318 | $ | 39,320 | |||
Accrued capital expenditures and tenant improvements | $ | 6,089 | $ | 8,742 | |||
Accrued leasing fees and inducements | $ | 840 | $ | 772 | |||
Accrued redevelopment costs | $ | 1,019 | $ | — | |||
U.S. Treasury securities transferred in connection with defeasance of mortgages payable | $ | 439,403 | $ | — | |||
Defeasance of mortgages payable | $ | 379,435 | $ | — | |||
Purchase of investment properties (after credits at closing): | |||||||
Net investment properties | $ | (101,307 | ) | $ | (257,157 | ) | |
Accounts receivable, acquired lease intangibles and other assets | (7,659 | ) | (25,049 | ) | |||
Accounts payable, acquired lease intangibles and other liabilities | 7,008 | 5,013 | |||||
Deferred gain | 2,524 | — | |||||
Mortgages payable assumed, net | — | 15,316 | |||||
$ | (99,434 | ) | $ | (261,877 | ) | ||
Proceeds from sales of investment properties: | |||||||
Net investment properties | $ | 245,853 | $ | 126,057 | |||
Accounts receivable, acquired lease intangibles and other assets | 9,766 | 10,503 | |||||
Accounts payable, acquired lease intangibles and other liabilities | (6,258 | ) | (3,276 | ) | |||
Deferred gain | (676 | ) | — | ||||
Mortgage debt forgiven or assumed | — | (94,353 | ) | ||||
Gain on extinguishment of debt | — | 13,653 | |||||
Gain on sales of investment properties | 157,792 | 31,352 | |||||
Proceeds temporarily restricted related to potential Internal Revenue Code Section 1031 tax-deferred exchanges | (93,561 | ) | (42,905 | ) | |||
$ | 312,916 | $ | 41,031 |
Wholly-owned | ||
Retail operating properties (a) | 132 | |
Office properties | 1 | |
Total operating properties | 133 | |
Redevelopment properties | 2 |
(a) | Excludes four wholly-owned operating properties classified as held for sale as of June 30, 2017. |
Date | Property Name | Metropolitan Statistical Area (MSA) | Property Type | Square Footage | Acquisition Price | |||||||||
January 13, 2017 | Main Street Promenade (a) | Chicago | Multi-tenant retail | 181,600 | $ | 88,000 | ||||||||
January 25, 2017 | Boulevard at the Capital Centre – Fee Interest (b) | Washington, D.C. | Fee interest (b) | — | 2,000 | |||||||||
February 24, 2017 | One Loudoun Downtown – Phase II (c) | Washington, D.C. | Additional phase of multi-tenant retail (c) | 15,900 | 4,128 | |||||||||
April 5, 2017 | One Loudoun Downtown – Phase III (c) | Washington, D.C. | Additional phase of multi-tenant retail (c) | 9,800 | 2,193 | |||||||||
May 16, 2017 | One Loudoun Downtown – Phase IV (c) | Washington, D.C. | Development rights (c) | — | 3,500 | |||||||||
207,300 | $ | 99,821 | (d) |
(a) | This property was acquired through a consolidated VIE and was used to facilitate an Internal Revenue Code Section 1031 tax-deferred exchange (1031 Exchange). |
(b) | The wholly-owned multi-tenant retail operating property located in Largo, Maryland was previously subject to an approximately 70 acre long-term ground lease with a third party. The Company completed a transaction whereby it received the fee interest in approximately 50 acres of the underlying land in exchange for which (i) the Company paid $1,939 and (ii) the term of the ground lease with respect to the remaining approximately 20 acres was shortened to nine months. The Company derecognized building and improvements of $11,347 related to the remaining ground lease, recognized the fair value of land received of $15,200 and recorded a deferred gain of $2,524. The deferred gain will be recognized upon the expiration of the remaining ground lease. The total number of properties in the Company’s portfolio was not affected by this transaction. |
(c) | The Company acquired three additional phases, including the development rights for an additional 123 multi-family units for a total of 408, at its One Loudoun Downtown multi-tenant retail operating property, which were accounted for as asset acquisitions. The total number of properties in the Company’s portfolio was not affected by these transactions. The remaining phases at One Loudoun Downtown, representing an aggregate gross purchase price of up to $25,700, are expected to close during the third quarter of 2017 as the seller completes construction on stand-alone buildings at the property. |
(d) | Acquisition price does not include capitalized closing costs and adjustments totaling $2,334. |
Date | Property Name | MSA | Property Type | Square Footage | Acquisition Price | ||||||||
January 15, 2016 | Shoppes at Hagerstown (a) | Hagerstown | Multi-tenant retail | 113,000 | $ | 27,055 | |||||||
January 15, 2016 | Merrifield Town Center II (a) | Washington, D.C. | Multi-tenant retail | 76,000 | 45,676 | ||||||||
March 29, 2016 | Oak Brook Promenade (b) | Chicago | Multi-tenant retail | 183,200 | 65,954 | ||||||||
April 1, 2016 | The Shoppes at Union Hill (c) | New York | Multi-tenant retail | 91,700 | 63,060 | ||||||||
April 29, 2016 | Ashland & Roosevelt – Fee Interest (d) | Chicago | Ground lease interest (d) | — | 13,850 | ||||||||
May 5, 2016 | Tacoma South (b) | Seattle | Multi-tenant retail | 230,700 | 39,400 | ||||||||
June 15, 2016 | Eastside (b) | Dallas | Multi-tenant retail | 67,100 | 23,842 | ||||||||
761,700 | $ | 278,837 |
(a) | These properties were acquired as a two-property portfolio. Merrifield Town Center II also contains 62,000 square feet of storage space for a total of 138,000 square feet. |
(b) | These properties were acquired through consolidated VIEs and were used to facilitate 1031 Exchanges. |
(c) | In conjunction with the acquisition, the Company assumed mortgage debt with a principal balance of $15,971 and an interest rate of 3.75% that matures in 2031. |
(d) | The Company acquired the fee interest in an existing wholly-owned multi-tenant retail operating property located in Chicago, Illinois, which was previously subject to a ground lease with a third party. In conjunction with this transaction, the Company reversed the straight-line ground rent liability of $6,978, which is reflected as “Gain on extinguishment of other liabilities” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. |
Six Months Ended June 30, | ||||||||
2017 | 2016 | |||||||
Land | $ | 23,559 | $ | 84,720 | ||||
Building and other improvements, net | 77,748 | 172,437 | ||||||
Acquired lease intangible assets (a) | 7,343 | 25,016 | ||||||
Acquired lease intangible liabilities (b) | (5,477 | ) | (3,991 | ) | ||||
Other liabilities | (1,076 | ) | — | |||||
Mortgages payable, net | — | (15,316 | ) | |||||
Net assets acquired | $ | 102,097 | $ | 262,866 |
(a) | The weighted average amortization period for acquired lease intangible assets is six years for acquisitions completed during the six months ended June 30, 2017 and 2016. |
(b) | The weighted average amortization period for acquired lease intangible liabilities is 13 years and 11 years for acquisitions completed during the six months ended June 30, 2017 and 2016, respectively. |
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||
Total revenues | $ | 147,813 | $ | 300,126 | ||||
Net income | $ | 28,559 | $ | 74,975 | ||||
Net income attributable to common shareholders | $ | 26,196 | $ | 70,250 | ||||
Earnings per common share – basic and diluted | ||||||||
Net income per common share attributable to common shareholders | $ | 0.11 | $ | 0.30 | ||||
Weighted average number of common shares outstanding – basic | 236,716 | 236,647 |
Date | Property Name | Property Type | Square Footage | Consideration | Aggregate Proceeds, Net (a) | Gain | |||||||||||||
January 27, 2017 | Rite Aid Store (Eckerd), Culver Rd. – Rochester, NY | Single-user retail | 10,900 | $ | 500 | $ | 332 | $ | — | ||||||||||
February 21, 2017 | Shoppes at Park West | Multi-tenant retail | 63,900 | 15,383 | 15,261 | 7,569 | |||||||||||||
March 7, 2017 | CVS Pharmacy – Sylacauga, AL (b) | Single-user retail | 10,100 | 3,700 | 16 | 1,651 | |||||||||||||
March 8, 2017 | Rite Aid Store (Eckerd) – Kill Devil Hills, NC | Single-user retail | 13,800 | 4,297 | 4,134 | 1,857 | |||||||||||||
March 15, 2017 | Century III Plaza – Home Depot (c) | Single-user parcel | 131,900 | 17,519 | 17,344 | 4,487 | |||||||||||||
March 16, 2017 | Village Shoppes at Gainesville | Multi-tenant retail | 229,500 | 41,750 | 41,380 | 14,107 | |||||||||||||
March 24, 2017 | Northwood Crossing (b) | Multi-tenant retail | 160,000 | 22,850 | 4 | 10,007 | |||||||||||||
April 4, 2017 | University Town Center (b) | Multi-tenant retail | 57,500 | 14,700 | (5 | ) | 9,128 | ||||||||||||
April 4, 2017 | Edgemont Town Center (b) | Multi-tenant retail | 77,700 | 19,025 | (28 | ) | 8,995 | ||||||||||||
April 4, 2017 | Phenix Crossing (b) | Multi-tenant retail | 56,600 | 12,400 | (28 | ) | 5,699 | ||||||||||||
April 27, 2017 | Brown’s Lane | Multi-tenant retail | 74,700 | 10,575 | 10,318 | 3,408 | |||||||||||||
May 9, 2017 | Rite Aid Store (Eckerd) – Greer, SC | Single-user retail | 13,800 | 3,050 | 2,961 | 830 | |||||||||||||
May 9, 2017 | Evans Towne Centre | Multi-tenant retail | 75,700 | 11,825 | 11,419 | 5,226 | |||||||||||||
May 25, 2017 | Red Bug Village | Multi-tenant retail | 26,200 | 8,100 | 7,767 | 2,184 | |||||||||||||
May 26, 2017 | Wilton Square | Multi-tenant retail | 438,100 | 49,300 | 48,503 | 19,630 | |||||||||||||
May 30, 2017 | Town Square Plaza | Multi-tenant retail | 215,600 | 28,600 | 26,459 | 3,412 | |||||||||||||
May 31, 2017 | Cuyahoga Falls Market Center | Multi-tenant retail | 76,400 | 11,500 | 11,101 | 1,300 | |||||||||||||
June 5, 2017 | Plaza Santa Fe II | Multi-tenant retail | 224,200 | 35,220 | 33,506 | 16,136 | |||||||||||||
June 6, 2017 | Rite Aid Store (Eckerd)–Columbia, SC | Single-user retail | 13,400 | 3,250 | 3,163 | 1,046 | |||||||||||||
June 16, 2017 | Fox Creek Village | Multi-tenant retail | 107,500 | 24,825 | 24,415 | 12,470 | |||||||||||||
June 29, 2017 | Cottage Plaza | Multi-tenant retail | 85,500 | 23,050 | 22,685 | 8,039 | |||||||||||||
June 29, 2017 | Magnolia Square | Multi-tenant retail | 116,000 | 16,000 | 15,692 | 4,866 | |||||||||||||
June 29, 2017 | Cinemark Seven Bridges | Single-user retail | 70,200 | 15,271 | 14,948 | 3,973 | |||||||||||||
June 29, 2017 | Low Country Village I & II (b) | Multi-tenant retail | 139,900 | 22,075 | (67 | ) | 10,286 | ||||||||||||
2,489,100 | $ | 414,765 | $ | 311,280 | $ | 156,306 |
(a) | Aggregate proceeds are net of transaction costs and proceeds temporarily restricted related to potential 1031 Exchanges and exclude $150 of condemnation proceeds, which did not result in any additional gain recognition. |
(b) | The following disposition proceeds are temporarily restricted related to potential 1031 Exchanges and are included in “Other assets, net” in the accompanying condensed consolidated balance sheets: |
Property Name | Proceeds Temporarily Restricted | |||
CVS Pharmacy – Sylacauga, AL | $ | 3,332 | ||
Northwood Crossing | 22,719 | |||
University Town Center | 14,595 | |||
Edgemont Town Center | 18,885 | |||
Phenix Crossing | 12,324 | |||
Low Country Village I & II | 21,706 | |||
$ | 93,561 |
(c) | The Company disposed of the Home Depot parcel at Century III Plaza, an existing 284,100 square foot multi-tenant retail operating property. The remaining portion of Century III Plaza is classified as held for sale as of June 30, 2017. |
Date | Property Name | Property Type | Square Footage | Consideration | Aggregate Proceeds, Net (a) | Gain | |||||||||||||
February 1, 2016 | The Gateway (b) | Multi-tenant retail | 623,200 | $ | 75,000 | $ | (795 | ) | $ | 3,868 | |||||||||
February 10, 2016 | Stateline Station | Multi-tenant retail | 142,600 | 17,500 | 17,210 | 4,253 | |||||||||||||
March 30, 2016 | Six Property Portfolio (c) | Single-user retail | 230,400 | 35,413 | 12 | 13,618 | |||||||||||||
April 20, 2016 | CVS Pharmacy – Oklahoma City, OK | Single-user retail | 10,900 | 4,676 | 4,608 | 1,764 | |||||||||||||
June 2, 2016 | Rite Aid Store (Eckerd) – Canandaigua, NY & Tim Horton Donut Shop (d) | Single-user retail | 16,600 | 5,400 | 5,333 | 1,444 | |||||||||||||
June 15, 2016 | Academy Sports – Midland, TX (e) | Single-user retail | 61,200 | 5,541 | 17 | 2,220 | |||||||||||||
June 23, 2016 | Four Rite Aid Portfolio (f) | Single-user retail | 45,400 | 15,934 | 14,646 | 2,287 | |||||||||||||
1,130,300 | $ | 159,464 | $ | 41,031 | $ | 29,454 |
(a) | Aggregate proceeds are net of transaction costs and proceeds temporarily restricted related to potential 1031 Exchanges. |
(b) | The property was disposed of through a lender-directed sale in full satisfaction of the Company’s $94,353 mortgage obligation. Immediately prior to the disposition, the lender reduced the Company’s loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653. |
(c) | Portfolio consists of the following properties: (i) Academy Sports – Houma, LA, (ii) Academy Sports – Port Arthur, TX, (iii) Academy Sports – San Antonio, TX, (iv) CVS Pharmacy – Moore, OK, (v) CVS Pharmacy – Saginaw, TX and (vi) Rite Aid Store (Eckerd) – Olean, NY. As of June 30, 2016, disposition proceeds of $34,973 were temporarily restricted related to 1031 Exchanges and are included in “Other assets, net” in the accompanying condensed consolidated balance sheets. |
(d) | The terms of the disposition of Rite Aid Store (Eckerd) – Canandaigua, NY and Tim Horton Donut Shop – Canandaigua, NY were negotiated as a single transaction. |
(e) | As of June 30, 2016, disposition proceeds of $5,383 were temporarily restricted related to a 1031 Exchange and are included in “Other assets, net” in the accompanying condensed consolidated balance sheets. |
(f) | Portfolio consists of the following properties: (i) Rite Aid Store (Eckerd) – Cheektowaga, NY, (ii) Rite Aid Store (Eckerd), W. Main St. – Batavia, NY, (iii) Rite Aid Store (Eckerd), Union Rd. – West Seneca, NY and (iv) Rite Aid Store (Eckerd) – Greece, NY. |
Property Name | Property Location | Property Type | Square Footage | ||||
Century III Plaza, excluding the Home Depot parcel | West Mifflin, Pennsylvania | Multi-tenant retail | 152,200 | ||||
Lakepointe Towne Center | Lewisville, Texas | Multi-tenant retail | 196,600 | ||||
Irmo Station | Irmo, South Carolina | Multi-tenant retail | 99,400 | ||||
Boulevard Plaza | Pawtucket, Rhode Island | Multi-tenant retail | 111,100 | ||||
559,300 |
June 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Land, building and other improvements | $ | 54,396 | $ | 45,395 | |||
Less accumulated depreciation | (11,852 | ) | (15,769 | ) | |||
Net investment properties | 42,544 | 29,626 | |||||
Other assets | 1,543 | 1,201 | |||||
Assets associated with investment properties held for sale | $ | 44,087 | $ | 30,827 | |||
Liabilities | |||||||
Other liabilities | $ | 1,142 | $ | 864 | |||
Liabilities associated with investment properties held for sale | $ | 1,142 | $ | 864 |
Unvested Restricted Shares | Weighted Average Grant Date Fair Value per Restricted Share | |||||
Balance as of January 1, 2017 | 542 | $ | 15.28 | |||
Shares granted (a) | 285 | $ | 14.60 | |||
Shares vested | (271 | ) | $ | 15.45 | ||
Balance as of June 30, 2017 (b) | 556 | $ | 14.85 |
(a) | Shares granted vest over periods ranging from one year to three years in accordance with the terms of applicable award agreements. |
(b) | As of June 30, 2017, total unrecognized compensation expense related to unvested restricted shares was $4,574, which is expected to be amortized over a weighted average term of 1.4 years. |
Unvested RSUs | Weighted Average Grant Date Fair Value per RSU | |||||
RSUs eligible for future conversion as of January 1, 2017 | 391 | $ | 14.02 | |||
RSUs granted (a) | 253 | $ | 15.52 | |||
RSUs eligible for future conversion as of June 30, 2017 (b) | 644 | $ | 14.61 |
(a) | Assumptions and inputs as of the grant date included a risk-free interest rate of 1.50%, the Company’s historical common stock performance relative to the peer companies within the National Association of Real Estate Investment Trusts (NAREIT) Shopping Center Index and the Company’s common stock dividend yield of 4.32%. In 2020, following the performance period which concludes on December 31, 2019, one-third of the RSUs that are earned will convert into shares of common stock and two-thirds will convert into restricted shares with a one year vesting term. |
(b) | As of June 30, 2017, total unrecognized compensation expense related to unvested RSUs was $6,105, which is expected to be amortized over a weighted average term of 2.7 years. |
June 30, 2017 | December 31, 2016 | ||||||||||||||||
Aggregate Principal Balance | Weighted Average Interest Rate | Weighted Average Years to Maturity | Aggregate Principal Balance | Weighted Average Interest Rate | Weighted Average Years to Maturity | ||||||||||||
Fixed rate mortgages payable (a) | $ | 355,389 | 5.22 | % | 4.9 | $ | 773,395 | 6.31 | % | 4.2 | |||||||
Premium, net of accumulated amortization | 1,223 | 1,437 | |||||||||||||||
Discount, net of accumulated amortization | (601 | ) | (622 | ) | |||||||||||||
Capitalized loan fees, net of accumulated amortization | (772 | ) | (5,026 | ) | |||||||||||||
Mortgages payable, net | $ | 355,239 | $ | 769,184 |
(a) | The fixed rate mortgages had interest rates ranging from 3.75% to 8.00% as of June 30, 2017 and December 31, 2016. |
2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | |||||||||||||||||||||
Debt: | |||||||||||||||||||||||||||
Fixed rate debt: | |||||||||||||||||||||||||||
Mortgages payable (a) | $ | 27,157 | $ | 5,065 | $ | 65,352 | $ | 3,923 | $ | 22,820 | $ | 231,072 | $ | 355,389 | |||||||||||||
Fixed rate term loans (b) | — | — | — | — | 250,000 | 200,000 | 450,000 | ||||||||||||||||||||
Unsecured notes payable (c) | — | — | — | — | 100,000 | 600,000 | 700,000 | ||||||||||||||||||||
Total fixed rate debt | 27,157 | 5,065 | 65,352 | 3,923 | 372,820 | 1,031,072 | 1,505,389 | ||||||||||||||||||||
Variable rate debt: | |||||||||||||||||||||||||||
Variable rate term loan and revolving line of credit | — | 200,000 | — | 182,000 | — | — | 382,000 | ||||||||||||||||||||
Total debt (d) | $ | 27,157 | $ | 205,065 | $ | 65,352 | $ | 185,923 | $ | 372,820 | $ | 1,031,072 | $ | 1,887,389 | |||||||||||||
Weighted average interest rate on debt: | |||||||||||||||||||||||||||
Fixed rate debt | 4.18 | % | 5.49 | % | 7.45 | % | 4.62 | % | 2.73 | % | 4.08 | % | 3.90 | % | |||||||||||||
Variable rate debt (e) | — | 2.61 | % | — | 2.58 | % | — | — | 2.59 | % | |||||||||||||||||
Total | 4.18 | % | 2.68 | % | 7.45 | % | 2.62 | % | 2.73 | % | 4.08 | % | 3.64 | % |
(a) | Excludes mortgage premium of $1,223 and discount of $(601), net of accumulated amortization, as of June 30, 2017. |
(b) | $250,000 of London Interbank Offered Rate (LIBOR)-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a weighted average fixed rate of 0.67% through December 31, 2017. In addition, $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a fixed rate of 1.26% through November 22, 2018. |
(c) | Excludes discount of $(912), net of accumulated amortization, as of June 30, 2017. |
(d) | The weighted average years to maturity of consolidated indebtedness was 5.3 years as of June 30, 2017. Total debt excludes capitalized loan fees of $(7,865), net of accumulated amortization, as of June 30, 2017, which are included as a reduction to the respective debt balances. |
(e) | Represents interest rates as of June 30, 2017. |
June 30, 2017 | December 31, 2016 | |||||||||||||||
Unsecured Notes Payable | Maturity Date | Principal Balance | Interest Rate/ Weighted Average Interest Rate | Principal Balance | Interest Rate/ Weighted Average Interest Rate | |||||||||||
Senior notes – 4.12% due 2021 | June 30, 2021 | $ | 100,000 | 4.12 | % | $ | 100,000 | 4.12 | % | |||||||
Senior notes – 4.58% due 2024 | June 30, 2024 | 150,000 | 4.58 | % | 150,000 | 4.58 | % | |||||||||
Senior notes – 4.00% due 2025 | March 15, 2025 | 250,000 | 4.00 | % | 250,000 | 4.00 | % | |||||||||
Senior notes – 4.08% due 2026 | September 30, 2026 | 100,000 | 4.08 | % | 100,000 | 4.08 | % | |||||||||
Senior notes – 4.24% due 2028 | December 28, 2028 | 100,000 | 4.24 | % | 100,000 | 4.24 | % | |||||||||
700,000 | 4.19 | % | 700,000 | 4.19 | % | |||||||||||
Discount, net of accumulated amortization | (912 | ) | (971 | ) | ||||||||||||
Capitalized loan fees, net of accumulated amortization | (3,647 | ) | (3,886 | ) | ||||||||||||
Total | $ | 695,441 | $ | 695,143 |
June 30, 2017 | December 31, 2016 | |||||||||||||||
Maturity Date | Balance | Interest Rate | Balance | Interest Rate | ||||||||||||
$250,000 unsecured credit facility term loan – fixed rate (a) | January 5, 2021 | $ | 250,000 | 1.97 | % | $ | 250,000 | 1.97 | % | |||||||
$200,000 unsecured credit facility term loan – variable rate | May 11, 2018 | 200,000 | 2.61 | % | 200,000 | 2.22 | % | |||||||||
$200,000 unsecured term loan due 2023 – fixed rate (b) | November 22, 2023 | 200,000 | 2.96 | % | — | — | % | |||||||||
Subtotal | 650,000 | 450,000 | ||||||||||||||
Capitalized loan fees, net of accumulated amortization | (3,446 | ) | (2,402 | ) | ||||||||||||
Term loans, net | $ | 646,554 | $ | 447,598 | ||||||||||||
Revolving line of credit – variable rate (c) | January 5, 2020 | $ | 182,000 | 2.58 | % | $ | 86,000 | 2.12 | % |
(a) | $250,000 of LIBOR-based variable rate debt has been swapped to a weighted average fixed rate of 0.67% plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of June 30, 2017 and December 31, 2016. |
(b) | $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 1.26% plus a credit spread based on a leverage grid ranging from 1.70% to 2.55% through November 22, 2018. The applicable credit spread was 1.70% as of June 30, 2017. |
(c) | Excludes capitalized loan fees, which are included in “Other assets, net” in the accompanying condensed consolidated balance sheets. |
Leverage-Based Pricing | Ratings-Based Pricing | |||||||||||
Unsecured Credit Facility | Maturity Date | Extension Option | Extension Fee | Credit Spread | Unused Fee | Credit Spread | Facility Fee | |||||
$250,000 unsecured term loan | 1/5/2021 | N/A | N/A | 1.30% - 2.20% | N/A | 0.90% - 1.75% | N/A | |||||
$200,000 unsecured term loan | 5/11/2018 | 2 one year | 0.15% | 1.45% - 2.20% | N/A | 1.05% - 2.05% | N/A | |||||
$750,000 unsecured revolving line of credit | 1/5/2020 | 2 six month | 0.075% | 1.35% - 2.25% | 0.15% - 0.25% | 0.85% - 1.55% | 0.125% - 0.30% |
Term Loan Due 2023 | Maturity Date | Leverage-Based Pricing Credit Spread | Ratings-Based Pricing Credit Spread | |||
$200,000 unsecured term loan | 11/22/2023 | 1.70% – 2.55% | 1.50% – 2.45% |
Effective Date | Notional | Fixed Interest Rate | Termination Date | ||||||
March 1, 2016 | $ | 100,000 | 0.66 | % | December 31, 2017 | ||||
May 16, 2016 | $ | 150,000 | 0.67 | % | December 31, 2017 | ||||
January 3, 2017 | $ | 100,000 | 1.26 | % | November 22, 2018 | ||||
January 3, 2017 | $ | 100,000 | 1.26 | % | November 22, 2018 |
Number of Instruments | Notional | |||||||||||||
Interest Rate Derivatives | June 30, 2017 | December 31, 2016 | June 30, 2017 | December 31, 2016 | ||||||||||
Interest rate swaps | 4 | 2 | $ | 450,000 | $ | 250,000 |
Fair Value | ||||||||
June 30, 2017 | December 31, 2016 | |||||||
Derivatives designated as cash flow hedges: | ||||||||
Interest rate swaps | $ | 1,219 | $ | 743 |
Derivatives in Cash Flow Hedging Relationships | Amount of Loss (Gain) Recognized in Other Comprehensive Income on Derivative (Effective Portion) | Location of (Gain) Loss Reclassified from Accumulated Other Comprehensive Income (AOCI) into Income (Effective Portion) | Amount of (Gain) Loss Reclassified from AOCI into Income (Effective Portion) | Location of Loss Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | Amount of Loss Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2017 | $ | 59 | $ | (413 | ) | Interest expense | $ | (86 | ) | $ | 74 | Other income, net | $ | 5 | $ | 11 | ||||||||||||
2016 | $ | 634 | $ | 687 | Interest expense | $ | 124 | $ | 210 | Other income, net | $ | 3 | $ | 3 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Numerator: | ||||||||||||||||
(Loss) income from continuing operations | $ | (1,865 | ) | $ | 18,989 | $ | (52,129 | ) | $ | 44,676 | ||||||
Gain on sales of investment properties | 116,628 | 9,613 | 157,792 | 31,352 | ||||||||||||
Preferred stock dividends | (2,363 | ) | (2,363 | ) | (4,725 | ) | (4,725 | ) | ||||||||
Net income attributable to common shareholders | 112,400 | 26,239 | 100,938 | 71,303 | ||||||||||||
Distributions paid on unvested restricted shares | (88 | ) | (110 | ) | (178 | ) | (240 | ) | ||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | 112,312 | $ | 26,129 | $ | 100,760 | $ | 71,063 | ||||||||
Denominator: | ||||||||||||||||
Denominator for earnings per common share – basic: | ||||||||||||||||
Weighted average number of common shares outstanding | 234,243 | (a) | 236,716 | (b) | 235,269 | (a) | 236,647 | (b) | ||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | 1 | (c) | 2 | (c) | 1 | (c) | 2 | (c) | ||||||||
RSUs | 574 | (d) | 184 | (e) | 572 | (d) | 132 | (e) | ||||||||
Denominator for earnings per common share – diluted: | ||||||||||||||||
Weighted average number of common and common equivalent shares outstanding | 234,818 | 236,902 | 235,842 | 236,781 |
(a) | Excludes 556 shares of unvested restricted common stock as of June 30, 2017, which equate to 536 and 550 shares, respectively, on a weighted average basis for the three and six months ended June 30, 2017. These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the shares are released. |
(b) | Excludes 607 shares of unvested restricted common stock as of June 30, 2016, which equate to 649 and 687 shares, respectively, on a weighted average basis for the three and six months ended June 30, 2016. These shares were excluded from the computation of basic EPS as the contingencies remained and the shares had not been released as of the end of the reporting period. |
(c) | There were outstanding options to purchase 41 and 53 shares of common stock as of June 30, 2017 and 2016, respectively, at a weighted average exercise price of $19.25 and $19.39, respectively. Of these totals, outstanding options to purchase 35 and 45 shares of common stock as of June 30, 2017 and 2016, respectively, at a weighted average exercise price of $20.55 and $20.74, respectively, have been excluded from the common shares used in calculating diluted EPS as including them would be anti-dilutive. |
(d) | As of June 30, 2017, there were 644 RSUs eligible for future conversion upon completion of the performance periods (see Note 5 to the condensed consolidated financial statements), which equate to 644 and 641 RSUs on a weighted average basis for the three and six months ended June 30, 2017, respectively. These contingently issuable shares are included in diluted EPS based on the weighted average number of shares that would be outstanding during the period, if any, assuming June 30, 2017 was the end of the contingency periods. |
(e) | As of June 30, 2016, there were 391 RSUs eligible for future conversion upon completion of the performance periods, which equate to 411 and 344 RSUs on a weighted average basis for the three and six months ended June 30, 2016, respectively. These contingently issuable shares are included in diluted EPS based on the weighted average number of shares that would have been outstanding during the period, if any, assuming June 30, 2016 was the end of the contingency periods. |
June 30, 2017 | June 30, 2016 | ||||||
Number of properties for which indicators of impairment were identified | 7 | (a) | 6 | (b) | |||
Less: number of properties for which an impairment charge was recorded | 2 | 1 | |||||
Less: number of properties that were held for sale as of the date the analysis was performed for which indicators of impairment were identified but no impairment charge was recorded | 2 | 2 | |||||
Remaining properties for which indicators of impairment were identified but no impairment charge was considered necessary | 3 | 3 | |||||
Weighted average percentage by which the projected undiscounted cash flows exceeded its respective carrying value for each of the remaining properties (c) | 11 | % | 70 | % |
(a) | Includes two properties which were sold subsequent to June 30, 2017. |
(b) | Includes three properties which have subsequently been sold as of June 30, 2017. |
(c) | Based upon the estimated holding period for each asset where an undiscounted cash flow analysis was performed. |
Property Name | Property Type | Impairment Date | Square Footage | Provision for Impairment of Investment Properties | |||||||
Century III Plaza, excluding the Home Depot parcel (a) | Multi-tenant retail | June 30, 2017 | 152,200 | $ | 3,076 | ||||||
Lakepointe Towne Center (b) | Multi-tenant retail | June 30, 2017 | 196,600 | 9,958 | |||||||
$ | 13,034 | ||||||||||
Estimated fair value of impaired properties as of impairment date | $ | 22,500 |
(a) | The Company recorded an impairment charge based upon the terms and conditions of a bona fide purchase offer. This property was classified as held for sale as of June 30, 2017. The Home Depot parcel of Century III Plaza was sold on March 15, 2017. |
(b) | The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was classified as held for sale as of June 30, 2017. |
Property Name | Property Type | Impairment Date | Square Footage | Provision for Impairment of Investment Properties | |||||||
South Billings Center (a) | Development | March 31, 2016 | — | $ | 2,164 | ||||||
Mid-Hudson Center (b) | Multi-tenant retail | June 30, 2016 | 235,600 | 4,142 | |||||||
$ | 6,306 | ||||||||||
Estimated fair value of impaired properties as of impairment date | $ | 30,500 |
(a) | An impairment charge was recorded on March 31, 2016 based upon the terms and conditions of an executed sales contract, which was subsequently terminated. The property, which was not under active development, was sold on December 16, 2016 and additional impairment was recognized pursuant to the terms and conditions of an executed sales contract. |
(b) | The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was classified as held for sale as of June 30, 2016 and was sold on July 21, 2016. |
June 30, 2017 | December 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Financial assets: | |||||||||||||||
Derivative asset | $ | 1,219 | $ | 1,219 | $ | 743 | $ | 743 | |||||||
Financial liabilities: | |||||||||||||||
Mortgages payable, net | $ | 355,239 | $ | 373,975 | $ | 769,184 | $ | 833,210 | |||||||
Unsecured notes payable, net | $ | 695,441 | $ | 692,274 | $ | 695,143 | $ | 679,212 | |||||||
Unsecured term loans, net | $ | 646,554 | $ | 650,273 | $ | 447,598 | $ | 450,421 | |||||||
Unsecured revolving line of credit | $ | 182,000 | $ | 182,231 | $ | 86,000 | $ | 86,130 |
Fair Value | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
June 30, 2017 | |||||||||||||||
Derivative asset | $ | — | $ | 1,219 | $ | — | $ | 1,219 | |||||||
December 31, 2016 | |||||||||||||||
Derivative asset | $ | — | $ | 743 | $ | — | $ | 743 |
Fair Value | |||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Provision for Impairment (a) | |||||||||||||||
June 30, 2017 | |||||||||||||||||||
Investment properties – held for sale | $ | — | $ | 22,500 | (b) | $ | — | $ | 22,500 | $ | 13,034 | ||||||||
December 31, 2016 | |||||||||||||||||||
Investment properties | $ | — | $ | 500 | (c) | $ | 10,600 | (d) | $ | 11,100 | $ | 13,227 |
(a) | Excludes impairment charges recorded on investment properties sold prior to June 30, 2017 and December 31, 2016, respectively. |
(b) | Represents the fair values of the Company’s Century III Plaza and Lakepointe Towne Center investment properties. The estimated fair value of Century III Plaza of $12,000 was based upon the expected sales price from a bona fide purchase offer and determined to be a Level 2 input. The estimated fair value of Lakepointe Towne Center of $10,500 was based upon the expected sales price from an executed sales contract and determined to be a Level 2 input. |
(c) | Represents the fair value of the Company’s Rite Aid Store (Eckerd), Culver Rd. investment property. The estimated fair value of Rite Aid Store (Eckerd), Culver Rd. was based upon the expected sales price from a bona fide purchase offer and determined to be a Level 2 input. |
(d) | Represents the fair values of the Company’s Crown Theater and Saucon Valley Square investment properties. The estimated fair values of Crown Theater and Saucon Valley Square of $4,000 and $6,600, respectively, were determined using the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding period to a present value at a risk-adjusted rate. Discount rates, growth assumptions and terminal capitalization rates utilized in this approach are derived from property-specific information, market transactions and other financial and industry data. The terminal capitalization rate and discount rate are significant inputs to this valuation. The following were the key Level 3 inputs used in estimating the fair values of Crown Theater as of December 31, 2016 and Saucon Valley Square as of September 30, 2016, the date the assets were measured at fair value: |
2016 | ||||
Low | High | |||
Rental revenue growth rates | Varies (i) | Varies (i) | ||
Operating expense growth rates | 3.10% | 18.02% | ||
Discount rates | 9.35% | 10.00% | ||
Terminal capitalization rates | 8.35% | 9.50% |
(i) | Since cash flow models are established at the tenant level, projected rental revenue growth rates fluctuate over the course of the estimated holding period based upon the timing of lease rollover, amount of available space and other property and space-specific factors. |
Fair Value | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
June 30, 2017 | |||||||||||||||
Mortgages payable, net | $ | — | $ | — | $ | 373,975 | $ | 373,975 | |||||||
Unsecured notes payable, net | $ | 244,308 | $ | — | $ | 447,966 | $ | 692,274 | |||||||
Unsecured term loans, net | $ | — | $ | — | $ | 650,273 | $ | 650,273 | |||||||
Unsecured revolving line of credit | $ | — | $ | — | $ | 182,231 | $ | 182,231 | |||||||
December 31, 2016 | |||||||||||||||
Mortgages payable, net | $ | — | $ | — | $ | 833,210 | $ | 833,210 | |||||||
Unsecured notes payable, net | $ | 234,700 | $ | — | $ | 444,512 | $ | 679,212 | |||||||
Unsecured term loans, net | $ | — | $ | — | $ | 450,421 | $ | 450,421 | |||||||
Unsecured revolving line of credit | $ | — | $ | — | $ | 86,130 | $ | 86,130 |
• | closed on the acquisition of New Hyde Park Shopping Center, a 32,300 square foot multi-tenant retail property located in New Hyde Park, New York, for a gross purchase price of $22,075; |
• | closed on the disposition of Boulevard Plaza, a 111,100 square foot multi-tenant retail operating property located in Pawtucket, Rhode Island, which was classified as held for sale as of June 30, 2017, for a sales price of $14,300 with an anticipated gain on sale; |
• | closed on the disposition of Irmo Station, a 99,400 square foot multi-tenant retail operating property located in Irmo, South Carolina, which was classified as held for sale as of June 30, 2017, for a sales price of $16,027 with an anticipated gain on sale; |
• | closed on the disposition of Hickory Ridge, a 380,600 square foot multi-tenant retail operating property located in Hickory, North Carolina, for a sales price of $44,020 with an anticipated gain on sale; |
• | declared the cash dividend for the third quarter of 2017 for its 7.00% Series A cumulative redeemable preferred stock. The dividend of $0.4375 per preferred share will be paid on October 2, 2017 to preferred shareholders of record at the close of business on September 21, 2017; and |
• | declared the cash dividend for the third quarter of 2017 of $0.165625 per share on its outstanding Class A common stock, which will be paid on October 10, 2017 to Class A common shareholders of record at the close of business on September 26, 2017. |
• | economic, business and financial conditions, and changes in our industry and changes in the real estate markets in particular; |
• | economic and other developments in our target markets where we have a high concentration of properties; |
• | our business strategy; |
• | our projected operating results; |
• | rental rates and/or vacancy rates; |
• | frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants; |
• | bankruptcy or insolvency of a major tenant or a significant number of smaller tenants; |
• | interest rates or operating costs; |
• | real estate and zoning laws and changes in real property tax rates; |
• | real estate valuations; |
• | our leverage; |
• | our ability to generate sufficient cash flows to service our outstanding indebtedness and make distributions to our shareholders; |
• | our ability to obtain necessary outside financing; |
• | the availability, terms and deployment of capital; |
• | general volatility of the capital and credit markets and the market price of our Class A common stock; |
• | risks generally associated with real estate acquisitions and dispositions, including our ability to identify and pursue acquisition and disposition opportunities; |
• | risks generally associated with redevelopment, including the impact of construction delays and cost overruns, our ability to lease redeveloped space and our ability to identify and pursue redevelopment opportunities; |
• | composition of members of our senior management team; |
• | our ability to attract and retain qualified personnel; |
• | our ability to continue to qualify as a real estate investment trust (REIT); |
• | governmental regulations, tax laws and rates and similar matters; |
• | our compliance with laws, rules and regulations; |
• | environmental uncertainties and exposure to natural disasters; |
• | insurance coverage; and |
• | the likelihood or actual occurrence of terrorist attacks in the U.S. |
Property Type | Number of Properties | GLA (in thousands) | Occupancy | Percent Leased Including Leases Signed (a) | ||||||||
Operating portfolio: | ||||||||||||
Multi-tenant retail | ||||||||||||
Neighborhood and community centers | 68 | 8,733 | 92.2 | % | 92.8 | % | ||||||
Power centers | 43 | 10,080 | 94.6 | % | 96.1 | % | ||||||
Lifestyle centers and mixed-use properties | 15 | 4,081 | 87.3 | % | 88.8 | % | ||||||
Total multi-tenant retail | 126 | 22,894 | 92.4 | % | 93.5 | % | ||||||
Single-user retail | 6 | 455 | 100.0 | % | 100.0 | % | ||||||
Total retail operating portfolio | 132 | 23,349 | 92.5 | % | 93.7 | % | ||||||
Office | 1 | 895 | 13.6 | % | 46.1 | % | ||||||
Total operating portfolio (b) | 133 | 24,244 | 89.6 | % | 91.9 | % |
(a) | Includes leases signed but not commenced. |
(b) | Excludes four multi-tenant retail operating properties classified as held for sale as of June 30, 2017. |
Date | Property Name | Metropolitan Statistical Area (MSA) | Property Type | Square Footage | Acquisition Price | ||||||||
January 13, 2017 | Main Street Promenade | Chicago | Multi-tenant retail | 181,600 | $ | 88,000 | |||||||
January 25, 2017 | Boulevard at the Capital Centre – Fee Interest (a) | Washington, D.C. | Fee interest (a) | — | 2,000 | ||||||||
February 24, 2017 | One Loudoun Downtown – Phase II (b) | Washington, D.C. | Additional phase of multi-tenant retail (b) | 15,900 | 4,128 | ||||||||
April 5, 2017 | One Loudoun Downtown – Phase III (b) | Washington, D.C. | Additional phase of multi-tenant retail (b) | 9,800 | 2,193 | ||||||||
May 16, 2017 | One Loudoun Downtown – Phase IV (b) | Washington, D.C. | Development rights (b) | — | 3,500 | ||||||||
207,300 | $ | 99,821 |
(a) | The wholly-owned multi-tenant retail operating property located in Largo, Maryland was previously subject to an approximately 70 acre long-term ground lease with a third party. We completed a transaction whereby we received the fee interest in approximately 50 acres of the underlying land in exchange for which (i) we paid $1,939 and (ii) the term of the ground lease with respect to the remaining approximately 20 acres was shortened to nine months. We derecognized building and improvements of $11,347 related to the remaining ground lease, recognized the fair value of land received of $15,200 and recorded a deferred gain of $2,524. The deferred gain will be recognized upon the expiration of the remaining ground lease. The total number of properties in our portfolio was not affected by this transaction. |
(b) | We acquired three additional phases, including the development rights for an additional 123 multi-family units for a total of 408, at our One Loudoun Downtown multi-tenant retail operating property. The total number of properties in our portfolio was not affected by these transactions. The remaining phases at One Loudoun Downtown, representing an aggregate gross purchase price of up to $25,700, are expected to close during the third quarter of 2017 as the seller completes construction on stand-alone buildings at the property. |
Date | Property Name | Property Type | Square Footage | Consideration | |||||||
January 27, 2017 | Rite Aid Store (Eckerd), Culver Rd. – Rochester, NY | Single-user retail | 10,900 | $ | 500 | ||||||
February 21, 2017 | Shoppes at Park West | Multi-tenant retail | 63,900 | 15,383 | |||||||
March 7, 2017 | CVS Pharmacy – Sylacauga, AL (a) | Single-user retail | 10,100 | 3,700 | |||||||
March 8, 2017 | Rite Aid Store (Eckerd) – Kill Devil Hills, NC | Single-user retail | 13,800 | 4,297 | |||||||
March 15, 2017 | Century III Plaza – Home Depot (b) | Single-user parcel | 131,900 | 17,519 | |||||||
March 16, 2017 | Village Shoppes at Gainesville | Multi-tenant retail | 229,500 | 41,750 | |||||||
March 24, 2017 | Northwood Crossing (a) | Multi-tenant retail | 160,000 | 22,850 | |||||||
April 4, 2017 | University Town Center (a) | Multi-tenant retail | 57,500 | 14,700 | |||||||
April 4, 2017 | Edgemont Town Center (a) | Multi-tenant retail | 77,700 | 19,025 | |||||||
April 4, 2017 | Phenix Crossing (a) | Multi-tenant retail | 56,600 | 12,400 | |||||||
April 27, 2017 | Brown’s Lane | Multi-tenant retail | 74,700 | 10,575 | |||||||
May 9, 2017 | Rite Aid Store (Eckerd) – Greer, SC | Single-user retail | 13,800 | 3,050 | |||||||
May 9, 2017 | Evans Town Centre | Multi-tenant retail | 75,700 | 11,825 | |||||||
May 25, 2017 | Red Bug Village | Multi-tenant retail | 26,200 | 8,100 | |||||||
May 26, 2017 | Wilton Square | Multi-tenant retail | 438,100 | 49,300 | |||||||
May 30, 2017 | Town Square Plaza | Multi-tenant retail | 215,600 | 28,600 | |||||||
May 31, 2017 | Cuyahoga Falls Market Center | Multi-tenant retail | 76,400 | 11,500 | |||||||
June 5, 2017 | Plaza Santa Fe II | Multi-tenant retail | 224,200 | 35,220 | |||||||
June 6, 2017 | Rite Aid Store (Eckerd) – Columbia, SC | Single-user retail | 13,400 | 3,250 | |||||||
June 16, 2017 | Fox Creek Village | Multi-tenant retail | 107,500 | 24,825 | |||||||
June 29, 2017 | Cottage Plaza | Multi-tenant retail | 85,500 | 23,050 | |||||||
June 29, 2017 | Magnolia Square | Multi-tenant retail | 116,000 | 16,000 | |||||||
June 29, 2017 | Cinemark Seven Bridges | Single-user retail | 70,200 | 15,271 | |||||||
June 29, 2017 | Low Country Village I & II (a) | Multi-tenant retail | 139,900 | 22,075 | |||||||
2,489,100 | $ | 414,765 |
(a) | Disposition proceeds related to this property are temporarily restricted related to a potential 1031 Exchange. As of June 30, 2017, disposition proceeds totaling $93,561 are temporarily restricted and are included in “Other assets, net” in the accompanying condensed consolidated balance sheets. |
(b) | We disposed of the Home Depot parcel at Century III Plaza, an existing 284,100 square foot multi-tenant retail operating property. The remaining portion of Century III Plaza is classified as held for sale as of June 30, 2017. |
Property Type/Market | Number of Properties | ABR (a) | % of Total Multi-Tenant Retail ABR (a) | ABR per Occupied Sq. Ft. | GLA (in thousands) (a) | % of Total Multi-Tenant Retail GLA (a) | Occupancy | % Leased Including Signed | ||||||||||||||||||
Multi-Tenant Retail: | ||||||||||||||||||||||||||
Target Markets | ||||||||||||||||||||||||||
Dallas, Texas | 19 | $ | 80,210 | 21.2 | % | $ | 21.96 | 3,927 | 17.2 | % | 93.0 | % | 94.4 | % | ||||||||||||
Washington, D.C. / Baltimore, Maryland | 13 | 49,327 | 13.0 | % | 22.32 | 2,643 | 11.5 | % | 83.6 | % | 84.7 | % | ||||||||||||||
New York, New York | 8 | 33,891 | 9.0 | % | 27.79 | 1,260 | 5.5 | % | 96.8 | % | 97.8 | % | ||||||||||||||
Chicago, Illinois | 7 | 25,537 | 6.8 | % | 22.98 | 1,257 | 5.5 | % | 88.4 | % | 91.8 | % | ||||||||||||||
Seattle, Washington | 8 | 20,149 | 5.3 | % | 15.13 | 1,473 | 6.4 | % | 90.4 | % | 92.8 | % | ||||||||||||||
Atlanta, Georgia | 9 | 19,108 | 5.1 | % | 13.20 | 1,513 | 6.6 | % | 95.7 | % | 95.7 | % | ||||||||||||||
Houston, Texas | 9 | 15,317 | 4.0 | % | 14.18 | 1,141 | 5.0 | % | 94.7 | % | 94.9 | % | ||||||||||||||
San Antonio, Texas | 3 | 12,232 | 3.2 | % | 17.14 | 723 | 3.2 | % | 98.7 | % | 100.0 | % | ||||||||||||||
Phoenix, Arizona | 3 | 10,114 | 2.7 | % | 17.41 | 632 | 2.8 | % | 91.9 | % | 91.9 | % | ||||||||||||||
Austin, Texas | 4 | 5,253 | 1.4 | % | 16.10 | 350 | 1.5 | % | 93.2 | % | 94.1 | % | ||||||||||||||
Subtotal | 83 | 271,138 | 71.7 | % | 19.84 | 14,919 | 65.2 | % | 91.6 | % | 92.9 | % | ||||||||||||||
Non-Target – Top 50 MSAs | 19 | 44,154 | 11.7 | % | 15.75 | 3,028 | 13.2 | % | 92.6 | % | 94.6 | % | ||||||||||||||
Subtotal Target Markets and Top 50 MSAs | 102 | 315,292 | 83.4 | % | 19.14 | 17,947 | 78.4 | % | 91.8 | % | 93.2 | % | ||||||||||||||
Non-Target – Other | 24 | 62,697 | 16.6 | % | 13.44 | 4,947 | 21.6 | % | 94.3 | % | 94.7 | % | ||||||||||||||
Total Multi-Tenant Retail | 126 | 377,989 | 100.0 | % | 17.87 | 22,894 | 100.0 | % | 92.4 | % | 93.5 | % | ||||||||||||||
Single-User Retail | 6 | 10,669 | 23.45 | 455 | 100.0 | % | 100.0 | % | ||||||||||||||||||
Total Retail | 132 | 388,658 | 18.00 | 23,349 | 92.5 | % | 93.7 | % | ||||||||||||||||||
Office | 1 | 1,891 | 15.54 | 895 | 13.6 | % | 46.1 | % | ||||||||||||||||||
Total Operating Portfolio (b) | 133 | $ | 390,549 | $ | 17.98 | 24,244 | 89.6 | % | 91.9 | % |
(a) | Excludes $7,501 of multi-tenant retail ABR and 816 square feet of multi-tenant retail GLA attributable to our two active redevelopments, which are located in the Washington, D.C./Baltimore MSA. Including these amounts, 72.3% of our multi-tenant retail ABR and 66.4% of our multi-tenant retail GLA is located in our target markets. |
(b) | Excludes four multi-tenant retail operating properties classified as held for sale as of June 30, 2017. |
Number of Leases Signed | GLA Signed (in thousands) | New Contractual Rent per Square Foot (PSF) (a) | Prior Contractual Rent PSF (a) | % Change over Prior ABR (a) (b) | Weighted Average Lease Term | Tenant Allowances PSF | ||||||||||||||||||
Comparable Renewal Leases | 195 | 945 | $ | 20.45 | $ | 19.13 | 6.9 | % | 4.7 | $ | 1.30 | |||||||||||||
Comparable New Leases | 18 | 116 | $ | 23.71 | $ | 18.87 | 25.6 | % | 8.7 | $ | 42.90 | |||||||||||||
Non-Comparable New and Renewal Leases (c) | 48 | 202 | $ | 17.24 | N/A | N/A | 7.2 | $ | 31.41 | |||||||||||||||
Total | 261 | 1,263 | $ | 20.80 | $ | 19.10 | 8.9 | % | 5.5 | $ | 9.93 |
(a) | Total excludes the impact of Non-Comparable New and Renewal Leases. |
(b) | Excluding the impact from one lease within our non-target portfolio, combined comparable re-leasing spreads were approximately 9.8% and comparable renewal re-leasing spreads were approximately 7.8% over previous rental rates for the six months ended June 30, 2017. |
(c) | Includes (i) leases signed on units that were vacant for over 12 months, (ii) leases signed without fixed rental payments and (iii) leases signed where the previous and the current lease do not have a consistent lease structure. |
• | defeased the IW JV portfolio of mortgages payable, which had an outstanding principal balance of $379,435 and an interest rate of 7.50%, and incurred a defeasance premium and associated fees totaling $60,198; |
• | received funding in the amount of $200,000 on a seven-year unsecured term loan; |
• | entered into two agreements to swap a total of $200,000 of London Interbank Offered Rate (LIBOR)-based variable rate debt to a fixed interest rate of 1.26% through November 22, 2018; |
• | borrowed $96,000, net of repayments, on our unsecured revolving line of credit; |
• | repaid $36,186 of mortgages payable and made scheduled principal payments of $2,385 related to amortizing loans; and |
• | repurchased 6,024 shares of our common stock at an average price per share of $12.55 for a total of $75,697, resulting in $165,462 remaining available under our $250,000 common stock repurchase program. |
Three Months Ended June 30, | |||||||||||
2017 | 2016 | Change | |||||||||
Revenues | |||||||||||
Rental income | $ | 106,017 | $ | 115,194 | $ | (9,177 | ) | ||||
Tenant recovery income | 29,524 | 29,654 | (130 | ) | |||||||
Other property income | 1,798 | 2,378 | (580 | ) | |||||||
Total revenues | 137,339 | 147,226 | (9,887 | ) | |||||||
Expenses | |||||||||||
Operating expenses | 21,004 | 20,092 | 912 | ||||||||
Real estate taxes | 21,487 | 21,090 | 397 | ||||||||
Depreciation and amortization | 52,325 | 53,443 | (1,118 | ) | |||||||
Provision for impairment of investment properties | 13,034 | 4,142 | 8,892 | ||||||||
General and administrative expenses | 10,370 | 10,773 | (403 | ) | |||||||
Total expenses | 118,220 | 109,540 | 8,680 | ||||||||
Operating income | 19,119 | 37,686 | (18,567 | ) | |||||||
Gain on extinguishment of other liabilities | — | 6,978 | (6,978 | ) | |||||||
Interest expense | (21,435 | ) | (25,977 | ) | 4,542 | ||||||
Other income, net | 451 | 302 | 149 | ||||||||
(Loss) income from continuing operations | (1,865 | ) | 18,989 | (20,854 | ) | ||||||
Gain on sales of investment properties | 116,628 | 9,613 | 107,015 | ||||||||
Net income | 114,763 | 28,602 | 86,161 | ||||||||
Preferred stock dividends | (2,363 | ) | (2,363 | ) | — | ||||||
Net income attributable to common shareholders | $ | 112,400 | $ | 26,239 | $ | 86,161 |
• | a $107,015 increase in gain on sales of investment properties related to the sales of 17 investment properties, representing approximately 1,869,000 square feet of GLA, during the three months ended June 30, 2017 compared to the sales of eight investment properties and one outparcel, representing approximately 134,100 square feet of GLA, during the three months ended June 30, 2016; and |
• | a $4,542 decrease in interest expense primarily consisting of: |
• | a $10,836 decrease in interest on mortgages payable due to a reduction in mortgage debt; |
• | a $2,261 increase in prepayment penalties; |
• | a $2,080 increase in interest from our 4.08% senior unsecured notes due 2026 and our 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), which were issued in September and December 2016, respectively; and |
• | a $1,498 increase in interest on our Term Loan Due 2023, which funded in January 2017; |
• | a $9,177 decrease in rental income primarily consisting of a $9,368 decrease in base rent, which resulted from the operating properties sold during 2016 and 2017 or classified as held for sale as of June 30, 2017, along with our one remaining office property and our redevelopment properties, partially offset by an increase from the operating properties acquired during 2016 and 2017 and growth from our same store portfolio; |
• | an $8,892 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 12 and 13 to the accompanying condensed consolidated financial statements), we recognized impairment charges of $13,034 and $4,142 for the three months ended June 30, 2017 and 2016, respectively; and |
• | a $6,978 gain on extinguishment of other liabilities recognized during the three months ended June 30, 2016 related to the acquisition of the fee interest in Ashland & Roosevelt, one of our existing investment properties that was previously subject to a ground lease with a third party. The amount recognized represents the reversal of the straight-line ground rent liability associated with the ground lease. No such gain was recorded during the three months ended June 30, 2017. |
• | the removal of 14 same store investment properties sold during the three months ended June 30, 2017; and |
• | the removal of three same store investment properties classified as held for sale as of June 30, 2017. Century III Plaza, which is also classified as held for sale as of June 30, 2017, did not impact the number of same store properties as it was classified as held for sale as of March 31, 2017. |
• | properties acquired after December 31, 2015; |
• | our one remaining office property; |
• | three properties where we have begun redevelopment and/or activities in anticipation of future redevelopment; |
• | properties that were sold or held for sale in 2016 and 2017; |
• | the net income from our wholly-owned captive insurance company; and |
• | the historical ground rent expense related to an existing same store investment property that was subject to a ground lease with a third party prior to our acquisition of the fee interest on April 29, 2016. |
Three Months Ended June 30, | |||||||||||
2017 | 2016 | Change | |||||||||
Net income attributable to common shareholders | $ | 112,400 | $ | 26,239 | $ | 86,161 | |||||
Adjustments to reconcile to Same Store NOI: | |||||||||||
Preferred stock dividends | 2,363 | 2,363 | — | ||||||||
Gain on sales of investment properties | (116,628 | ) | (9,613 | ) | (107,015 | ) | |||||
Depreciation and amortization | 52,325 | 53,443 | (1,118 | ) | |||||||
Provision for impairment of investment properties | 13,034 | 4,142 | 8,892 | ||||||||
General and administrative expenses | 10,370 | 10,773 | (403 | ) | |||||||
Gain on extinguishment of other liabilities | — | (6,978 | ) | 6,978 | |||||||
Interest expense | 21,435 | 25,977 | (4,542 | ) | |||||||
Straight-line rental income, net | (919 | ) | (800 | ) | (119 | ) | |||||
Amortization of acquired above and below market lease intangibles, net | (549 | ) | (395 | ) | (154 | ) | |||||
Amortization of lease inducements | 259 | 321 | (62 | ) | |||||||
Lease termination fees | (510 | ) | (1,027 | ) | 517 | ||||||
Straight-line ground rent expense | 677 | 764 | (87 | ) | |||||||
Amortization of acquired ground lease intangibles | (140 | ) | (140 | ) | — | ||||||
Other income, net | (451 | ) | (302 | ) | (149 | ) | |||||
NOI | 93,666 | 104,767 | (11,101 | ) | |||||||
NOI from Other Investment Properties | (12,455 | ) | (24,990 | ) | 12,535 | ||||||
Same Store NOI | $ | 81,211 | $ | 79,777 | $ | 1,434 |
Three Months Ended June 30, | |||||||||||
2017 | 2016 | Change | |||||||||
Same Store NOI: | |||||||||||
Base rent | $ | 88,041 | $ | 86,806 | $ | 1,235 | |||||
Percentage and specialty rent | 490 | 802 | (312 | ) | |||||||
Tenant recovery income | 24,562 | 23,992 | 570 | ||||||||
Other property operating income | 874 | 809 | 65 | ||||||||
113,967 | 112,409 | 1,558 | |||||||||
Property operating expenses | 15,229 | 15,319 | (90 | ) | |||||||
Bad debt expense | (29 | ) | 90 | (119 | ) | ||||||
Real estate taxes | 17,556 | 17,223 | 333 | ||||||||
32,756 | 32,632 | 124 | |||||||||
Same Store NOI | $ | 81,211 | $ | 79,777 | $ | 1,434 |
• | base rent and percentage and specialty rent increased by a net of $923 primarily due to an increase of $672 from contractual rent changes and $571 from re-leasing spreads, partially offset by a decrease of $312 from percentage and specialty rent; |
• | property operating expenses and real estate taxes, net of tenant recovery income, decreased $327 primarily due to a positive impact from the common area maintenance reconciliation process; and |
• | bad debt expense decreased $119. |
Six Months Ended June 30, | |||||||||||
2017 | 2016 | Change | |||||||||
Revenues | |||||||||||
Rental income | $ | 215,991 | $ | 230,454 | $ | (14,463 | ) | ||||
Tenant recovery income | 60,310 | 60,010 | 300 | ||||||||
Other property income | 4,731 | 5,401 | (670 | ) | |||||||
Total revenues | 281,032 | 295,865 | (14,833 | ) | |||||||
Expenses | |||||||||||
Operating expenses | 42,868 | 43,153 | (285 | ) | |||||||
Real estate taxes | 43,366 | 41,029 | 2,337 | ||||||||
Depreciation and amortization | 105,799 | 106,839 | (1,040 | ) | |||||||
Provision for impairment of investment properties | 13,034 | 6,306 | 6,728 | ||||||||
General and administrative expenses | 21,583 | 22,179 | (596 | ) | |||||||
Total expenses | 226,650 | 219,506 | 7,144 | ||||||||
Operating income | 54,382 | 76,359 | (21,977 | ) | |||||||
Gain on extinguishment of debt | — | 13,653 | (13,653 | ) | |||||||
Gain on extinguishment of other liabilities | — | 6,978 | (6,978 | ) | |||||||
Interest expense | (106,967 | ) | (52,741 | ) | (54,226 | ) | |||||
Other income, net | 456 | 427 | 29 | ||||||||
(Loss) income from continuing operations | (52,129 | ) | 44,676 | (96,805 | ) | ||||||
Gain on sales of investment properties | 157,792 | 31,352 | 126,440 | ||||||||
Net income | 105,663 | 76,028 | 29,635 | ||||||||
Preferred stock dividends | (4,725 | ) | (4,725 | ) | — | ||||||
Net income attributable to common shareholders | $ | 100,938 | $ | 71,303 | $ | 29,635 |
• | a $126,440 increase in gain on sales of investment properties related to the sales of 23 investment properties and a single-user parcel located at an existing multi-tenant retail operating property, representing approximately 2,489,100 square feet of GLA, during the six months ended June 30, 2017 compared to the sales of 16 investment properties and one outparcel, representing approximately 1,130,300 square feet of GLA, during the six months ended June 30, 2016; |
• | a $54,226 increase in interest expense primarily consisting of: |
• | a $64,515 increase in prepayment penalties and defeasance premiums and a $3,343 increase in capitalized loan fee write-offs primarily related to the defeasance of the IW JV portfolio of mortgages payable during the six months ended June 30, 2017, which resulted in a defeasance premium and associated fees totaling $60,198 and the write-off of $4,003 of capitalized loan fees; |
• | a $4,160 increase in interest from our 4.08% senior unsecured notes due 2026 and our 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028), which were issued in September and December 2016, respectively; and |
• | a $2,946 increase in interest on our Term Loan Due 2023, which funded in January 2017; |
• | a $22,033 decrease in interest on mortgages payable due to a reduction in mortgage debt; |
• | a $14,463 decrease in rental income primarily consisting of a $14,335 decrease in base rent, which resulted from the operating properties sold during 2016 and 2017 or classified as held for sale as of June 30, 2017, along with our one |
• | a $13,653 gain on extinguishment of debt recognized during the six months ended June 30, 2016 associated with the disposition of The Gateway through a lender-directed sale in full satisfaction of our mortgage obligation. No such gain was recorded during the six months ended June 30, 2017; |
• | a $6,978 gain on extinguishment of other liabilities recognized during the six months ended June 30, 2016 related to the acquisition of the fee interest in Ashland & Roosevelt, one of our existing investment properties that was previously subject to a ground lease with a third party. The amount recognized represents the reversal of the straight-line ground rent liability associated with the ground lease. No such gain was recorded during the six months ended June 30, 2017; and |
• | a $6,728 increase in provision for impairment of investment properties. Based on the results of our evaluations for impairment (see Notes 12 and 13 to the accompanying condensed consolidated financial statements), we recognized impairment charges of $13,034 and $6,306 for the six months ended June 30, 2017 and 2016, respectively. |
Six Months Ended June 30, | |||||||||||
2017 | 2016 | Change | |||||||||
Net income attributable to common shareholders | $ | 100,938 | $ | 71,303 | $ | 29,635 | |||||
Adjustments to reconcile to Same Store NOI: | |||||||||||
Preferred stock dividends | 4,725 | 4,725 | — | ||||||||
Gain on sales of investment properties | (157,792 | ) | (31,352 | ) | (126,440 | ) | |||||
Depreciation and amortization | 105,799 | 106,839 | (1,040 | ) | |||||||
Provision for impairment of investment properties | 13,034 | 6,306 | 6,728 | ||||||||
General and administrative expenses | 21,583 | 22,179 | (596 | ) | |||||||
Gain on extinguishment of debt | — | (13,653 | ) | 13,653 | |||||||
Gain on extinguishment of other liabilities | — | (6,978 | ) | 6,978 | |||||||
Interest expense | 106,967 | 52,741 | 54,226 | ||||||||
Straight-line rental income, net | (1,260 | ) | (1,828 | ) | 568 | ||||||
Amortization of acquired above and below market lease intangibles, net | (1,280 | ) | (971 | ) | (309 | ) | |||||
Amortization of lease inducements | 582 | 552 | 30 | ||||||||
Lease termination fees | (2,122 | ) | (2,685 | ) | 563 | ||||||
Straight-line ground rent expense | 1,363 | 1,680 | (317 | ) | |||||||
Amortization of acquired ground lease intangibles | (280 | ) | (280 | ) | — | ||||||
Other income, net | (456 | ) | (427 | ) | (29 | ) | |||||
NOI | 191,801 | 208,151 | (16,350 | ) | |||||||
NOI from Other Investment Properties | (28,948 | ) | (48,404 | ) | 19,456 | ||||||
Same Store NOI | $ | 162,853 | $ | 159,747 | $ | 3,106 |
Six Months Ended June 30, | |||||||||||
2017 | 2016 | Change | |||||||||
Same Store NOI: | |||||||||||
Base rent | $ | 175,787 | $ | 173,126 | $ | 2,661 | |||||
Percentage and specialty rent | 1,890 | 2,134 | (244 | ) | |||||||
Tenant recovery income | 49,926 | 48,738 | 1,188 | ||||||||
Other property operating income | 1,773 | 1,622 | 151 | ||||||||
229,376 | 225,620 | 3,756 | |||||||||
Property operating expenses | 30,975 | 31,908 | (933 | ) | |||||||
Bad debt expense | 531 | 442 | 89 | ||||||||
Real estate taxes | 35,017 | 33,523 | 1,494 | ||||||||
66,523 | 65,873 | 650 | |||||||||
Same Store NOI | $ | 162,853 | $ | 159,747 | $ | 3,106 |
• | base rent and percentage and specialty rent increased by a net of $2,417 primarily due to an increase of $1,353 from contractual rent changes and $1,156 from re-leasing spreads, partially offset by a decrease of $244 from percentage and specialty rent; and |
• | property operating expenses and real estate taxes, net of tenant recovery income, decreased $627 primarily due to a positive impact from the common area maintenance reconciliation process in addition to decreases in certain non-recoverable and net recoverable property operating expenses, partially offset by increases in net real estate taxes resulting from higher real estate tax assessments. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income attributable to common shareholders | $ | 112,400 | $ | 26,239 | $ | 100,938 | $ | 71,303 | |||||||
Depreciation and amortization of depreciable real estate | 51,911 | 53,100 | 104,990 | 106,194 | |||||||||||
Provision for impairment of investment properties | 13,034 | 4,142 | 13,034 | 4,142 | |||||||||||
Gain on sales of depreciable investment properties | (116,628 | ) | (9,613 | ) | (157,792 | ) | (31,352 | ) | |||||||
FFO attributable to common shareholders | $ | 60,717 | $ | 73,868 | $ | 61,170 | $ | 150,287 | |||||||
FFO attributable to common shareholders per common share outstanding | $ | 0.26 | $ | 0.31 | $ | 0.26 | $ | 0.64 | |||||||
FFO attributable to common shareholders | $ | 60,717 | $ | 73,868 | $ | 61,170 | $ | 150,287 | |||||||
Impact on earnings from the early extinguishment of debt, net | 2,312 | 4 | 68,669 | (12,842 | ) | ||||||||||
Provision for hedge ineffectiveness | 5 | 3 | 11 | 3 | |||||||||||
Provision for impairment of non-depreciable investment property | — | — | — | 2,164 | |||||||||||
Gain on extinguishment of other liabilities | — | (6,978 | ) | — | (6,978 | ) | |||||||||
Other (a) | (149 | ) | (184 | ) | (19 | ) | (184 | ) | |||||||
Operating FFO attributable to common shareholders | $ | 62,885 | $ | 66,713 | $ | 129,831 | $ | 132,450 | |||||||
Operating FFO attributable to common shareholders per common share outstanding | $ | 0.27 | $ | 0.28 | $ | 0.55 | $ | 0.56 |
(a) | Primarily consists of the impact on earnings from actual or anticipated settlement of litigation involving the Company, including associated legal costs, which are included in “Other income, net” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. |
SOURCES | USES | ||
▪ | Operating cash flow | ▪ | Tenant allowances and leasing costs |
▪ | Cash and cash equivalents | ▪ | Improvements made to individual properties, certain of which are not |
▪ | Available borrowings under our unsecured revolving | recoverable through common area maintenance charges to tenants | |
line of credit | ▪ | Acquisitions | |
▪ | Proceeds from capital markets transactions | ▪ | Debt repayments and defeasances |
▪ | Proceeds from asset dispositions | ▪ | Distribution payments |
▪ | Redevelopment, renovation or expansion activities | ||
▪ | New development | ||
▪ | Repurchases of our common stock | ||
▪ | Redemption of our preferred stock |
Debt | Aggregate Principal Amount | Weighted Average Interest Rate | Maturity Date | Weighted Average Years to Maturity | |||||||
Fixed rate mortgages payable (a) | $ | 355,389 | 5.22 | % | Various | 4.9 years | |||||
Unsecured notes payable: | |||||||||||
Senior notes – 4.12% due 2021 | 100,000 | 4.12 | % | June 30, 2021 | 4.0 years | ||||||
Senior notes – 4.58% due 2024 | 150,000 | 4.58 | % | June 30, 2024 | 7.0 years | ||||||
Senior notes – 4.00% due 2025 | 250,000 | 4.00 | % | March 15, 2025 | 7.7 years | ||||||
Senior notes – 4.08% due 2026 | 100,000 | 4.08 | % | September 30, 2026 | 9.3 years | ||||||
Senior notes – 4.24% due 2028 | 100,000 | 4.24 | % | December 28, 2028 | 11.5 years | ||||||
Total unsecured notes payable (a) | 700,000 | 4.19 | % | 7.8 years | |||||||
Unsecured credit facility: | |||||||||||
Term loan – fixed rate (b) | 250,000 | 1.97 | % | January 5, 2021 | 3.5 years | ||||||
Term loan – variable rate (c) | 200,000 | 2.61 | % | May 11, 2018 (c) | 0.9 years | ||||||
Revolving line of credit – variable rate (c) | 182,000 | 2.58 | % | January 5, 2020 (c) | 2.5 years | ||||||
Total unsecured credit facility (a) | 632,000 | 2.35 | % | 2.4 years | |||||||
Term Loan Due 2023 – fixed rate (a) (d) | 200,000 | 2.96 | % | November 22, 2023 | 6.4 years | ||||||
Total consolidated indebtedness | $ | 1,887,389 | 3.64 | % | 5.3 years |
(a) | Fixed rate mortgages payable excludes mortgage premium of $1,223, discount of $(601) and capitalized loan fees of $(772), net of accumulated amortization, as of June 30, 2017. Unsecured notes payable excludes discount of $(912) and capitalized loan fees of $(3,647), net of accumulated amortization, as of June 30, 2017. Term loans exclude capitalized loan fees of $(3,446), net of accumulated amortization, as of June 30, 2017. Capitalized loan fees related to the revolving line of credit are included in “Other assets, net” in the accompanying condensed consolidated balance sheets. |
(b) | Reflects $250,000 of LIBOR-based variable rate debt that has been swapped to a weighted average fixed rate of 0.67% plus a credit spread based on a leverage grid ranging from 1.30% to 2.20% through December 31, 2017. The applicable credit spread was 1.30% as of June 30, 2017. |
(c) | We have two one year extension options on the term loan due 2018 and two six-month extension options on the revolving line of credit, which we may exercise as long as we are in compliance with the terms of the unsecured credit agreement and we pay an extension fee equal to 0.15% for the term loan and 0.075% of the commitment amount being extended for the revolving line of credit. |
(d) | Reflects $200,000 of LIBOR-based variable rate debt that has been swapped to a fixed rate of 1.26% plus a credit spread based on a leverage grid ranging from 1.70% to 2.55% through November 22, 2018. The applicable credit spread was 1.70% as of June 30, 2017. |
Leverage-Based Pricing | Ratings-Based Pricing | |||||||||||
Unsecured Credit Facility | Maturity Date | Extension Option | Extension Fee | Credit Spread | Unused Fee | Credit Spread | Facility Fee | |||||
$250,000 unsecured term loan | 1/5/2021 | N/A | N/A | 1.30% - 2.20% | N/A | 0.90% - 1.75% | N/A | |||||
$200,000 unsecured term loan | 5/11/2018 | 2 one year | 0.15% | 1.45% - 2.20% | N/A | 1.05% - 2.05% | N/A | |||||
$750,000 unsecured revolving line of credit | 1/5/2020 | 2 six month | 0.075% | 1.35% - 2.25% | 0.15% - 0.25% | 0.85% - 1.55% | 0.125% - 0.30% |
Term Loan Due 2023 | Maturity Date | Leverage-Based Pricing Credit Spread | Ratings-Based Pricing Credit Spread | |||
$200,000 unsecured term loan | 11/22/2023 | 1.70% – 2.55% | 1.50% – 2.45% |
2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||
Debt: | |||||||||||||||||||||||||||||||
Fixed rate debt: | |||||||||||||||||||||||||||||||
Mortgages payable (a) | $ | 27,157 | $ | 5,065 | $ | 65,352 | $ | 3,923 | $ | 22,820 | $ | 231,072 | $ | 355,389 | $ | 373,975 | |||||||||||||||
Fixed rate term loans (b) | — | — | — | — | 250,000 | 200,000 | 450,000 | 450,000 | |||||||||||||||||||||||
Unsecured notes payable (c) | — | — | — | — | 100,000 | 600,000 | 700,000 | 692,274 | |||||||||||||||||||||||
Total fixed rate debt | 27,157 | 5,065 | 65,352 | 3,923 | 372,820 | 1,031,072 | 1,505,389 | 1,516,249 | |||||||||||||||||||||||
Variable rate debt: | |||||||||||||||||||||||||||||||
Variable rate term loan and revolving line of credit | — | 200,000 | — | 182,000 | — | — | 382,000 | 382,504 | |||||||||||||||||||||||
Total debt (d) | $ | 27,157 | $ | 205,065 | $ | 65,352 | $ | 185,923 | $ | 372,820 | $ | 1,031,072 | $ | 1,887,389 | $ | 1,898,753 | |||||||||||||||
Weighted average interest rate on debt: | |||||||||||||||||||||||||||||||
Fixed rate debt | 4.18 | % | 5.49 | % | 7.45 | % | 4.62 | % | 2.73 | % | 4.08 | % | 3.90 | % | |||||||||||||||||
Variable rate debt (e) | — | 2.61 | % | — | 2.58 | % | — | — | 2.59 | % | |||||||||||||||||||||
Total | 4.18 | % | 2.68 | % | 7.45 | % | 2.62 | % | 2.73 | % | 4.08 | % | 3.64 | % |
(a) | Excludes mortgage premium of $1,223 and discount of $(601), net of accumulated amortization, as of June 30, 2017. |
(b) | $250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a weighted average fixed rate of 0.67% through December 31, 2017. In addition, $200,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through two interest rate swaps. The swaps effectively convert one-month floating rate LIBOR to a fixed rate of 1.26% through November 22, 2018. |
(c) | Excludes discount of $(912), net of accumulated amortization, as of June 30, 2017. |
(d) | The weighted average years to maturity of consolidated indebtedness was 5.3 years as of June 30, 2017. Total debt excludes capitalized loan fees of $(7,865), net of accumulated amortization, as of June 30, 2017, which are included as a reduction to the respective debt balances. |
(e) | Represents interest rates as of June 30, 2017. |
Number of Properties Sold (a) | Square Footage | Consideration | Aggregate Proceeds, Net (b) | Debt Extinguished | |||||||||||||||
2017 Dispositions (through June 30, 2017) | 24 | 2,489,100 | $ | 414,765 | $ | 311,280 | $ | — | (c) | ||||||||||
2016 Dispositions | 46 | 3,013,900 | $ | 540,362 | $ | 448,216 | $ | 94,353 | (c) (d) |
(a) | 2017 dispositions include the disposition of CVS Pharmacy – Sylacauga and the Home Depot parcel at Century III Plaza, both of which were classified as held for sale as of December 31, 2016. 2016 dispositions include the disposition of one development property, which was not under active development. |
(b) | Represents total consideration net of transaction costs and proceeds temporarily restricted related to potential 1031 Exchanges. 2017 dispositions exclude proceeds of $93,561 which are temporarily restricted related to potential 1031 Exchanges. |
(c) | Excludes $101,482 and $10,695 of mortgages payable repayments or defeasances completed prior to disposition of the respective property for the six months ended June 30, 2017 and year ended December 31, 2016, respectively. |
(d) | Represents The Gateway’s outstanding mortgage payable prior to the lender-directed sale of the property. Immediately prior to the disposition, the lender reduced our loan obligation to $75,000 which was assumed by the buyer in connection with the disposition. Along with the loan reduction, the lender received the balance of the restricted escrows that they held and the rights to unpaid accounts receivable and forgave accrued interest, resulting in a net gain on extinguishment of debt of $13,653. |
Number of Assets Acquired | Square Footage | Acquisition Price | Mortgage Debt | |||||||||||
2017 Acquisitions (through June 30, 2017) (a) | 5 | 207,300 | $ | 99,821 | $ | — | ||||||||
2016 Acquisitions (b) | 9 | 1,102,300 | $ | 408,308 | $ | 15,971 |
(a) | 2017 acquisitions include the purchase of the following: 1) the fee interest in our Boulevard at the Capital Centre multi-tenant retail operating property that was previously subject to a ground lease with a third party and 2) three additional phases, including the development rights for additional multi-family units, at our One Loudoun Downtown multi-tenant retail operating property that is being acquired in phases as the seller completes construction on stand-alone buildings at the property. The total number of properties in our portfolio was not affected by these transactions. |
(b) | 2016 acquisitions include the purchase of the following: 1) the fee interest in our Ashland & Roosevelt multi-tenant retail operating property that was previously subject to a ground lease with a third party and 2) the anchor space improvements at our Woodinville Plaza multi-tenant retail operating property that was previously subject to a ground lease with us. The total number of properties in our portfolio was not affected by these transactions. |
Six Months Ended June 30, | ||||||||||||
2017 | 2016 | Change | ||||||||||
Net cash provided by operating activities | $ | 126,177 | $ | 126,774 | $ | (597 | ) | |||||
Net cash provided by (used in) investing activities | 190,903 | (249,099 | ) | 440,002 | ||||||||
Net cash (used in) provided by financing activities | (342,196 | ) | 100,689 | (442,885 | ) | |||||||
Decrease in cash and cash equivalents | (25,116 | ) | (21,636 | ) | (3,480 | ) | ||||||
Cash and cash equivalents, at beginning of period | 53,119 | 51,424 | ||||||||||
Cash and cash equivalents, at end of period | $ | 28,003 | $ | 29,788 |
• | a $16,350 decrease in NOI, consisting of a decrease in NOI from properties that were sold or held for sale in 2016 and 2017 and other properties not included in our same store portfolio of $19,456, partially offset by an increase in Same Store NOI of $3,106; and |
• | a $3,790 increase in cash paid for leasing fees and inducements; |
• | a $5,678 decrease in cash paid for interest; |
• | a $758 decrease in cash bonuses paid; and |
• | ordinary course fluctuations in working capital accounts. |
• | a $271,885 increase in proceeds from the sales of investment properties; |
• | a $162,443 decrease in cash paid to purchase investment properties; and |
• | a $15,893 net change in restricted escrow activity; |
• | an $8,612 increase in investment in developments in progress; and |
• | a $1,413 increase in capital expenditures and tenant improvements. |
• | the $439,403 purchase of U.S. Treasury securities in connection with defeasance of the IW JV portfolio of mortgages payable during the six months ended June 30, 2017; |
• | a $109,000 decrease in net proceeds from our unsecured revolving line of credit; |
• | $75,697 paid in 2017 to repurchase common shares through our share repurchase program; and |
• | a $25,892 increase in principal payments on mortgages payable; |
• | $200,000 of proceeds from the Term Loan Due 2023, which funded in January 2017; and |
• | a $6,033 decrease in the payment of loan fees and deposits. |
• | closed on the acquisition of New Hyde Park Shopping Center, a 32,300 square foot multi-tenant retail property located in New Hyde Park, New York, for a gross purchase price of $22,075; |
• | closed on the disposition of Boulevard Plaza, a 111,100 square foot multi-tenant retail operating property located in Pawtucket, Rhode Island, which was classified as held for sale as of June 30, 2017, for a sales price of $14,300 with an anticipated gain on sale; |
• | closed on the disposition of Irmo Station, a 99,400 square foot multi-tenant retail operating property located in Irmo, South Carolina, which was classified as held for sale as of June 30, 2017, for a sales price of $16,027 with an anticipated gain on sale; |
• | closed on the disposition of Hickory Ridge, a 380,600 square foot multi-tenant retail operating property located in Hickory, North Carolina, for a sales price of $44,020 with an anticipated gain on sale; |
• | declared the cash dividend for the third quarter of 2017 for our 7.00% Series A cumulative redeemable preferred stock. The dividend of $0.4375 per preferred share will be paid on October 2, 2017 to preferred shareholders of record at the close of business on September 21, 2017; and |
• | declared the cash dividend for the third quarter of 2017 of $0.165625 per share on our outstanding Class A common stock, which will be paid on October 10, 2017 to Class A common shareholders of record at the close of business on September 26, 2017. |
Notional Amount | Termination Date | Fair Value of Derivative Asset | ||||||||
Fixed rate portion of Unsecured Credit Facility | $ | 250,000 | December 31, 2017 | $ | 742 | |||||
Term Loan Due 2023 | 200,000 | November 22, 2018 | 477 | |||||||
$ | 450,000 | $ | 1,219 |
(a) | Not applicable. |
(b) | Not applicable. |
(c) | Issuer Purchases of Equity Securities |
Period | Total number of shares of Class A common stock purchased | Average price paid per share of Class A common stock | Total number of shares purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (a) | ||||||||||
April 1, 2017 to April 30, 2017 | — | $ | — | — | $ | 241,159 | ||||||||
May 1, 2017 to May 31, 2017 | 3,686 | $ | 12.83 | 3,686 | $ | 193,791 | ||||||||
June 1, 2017 to June 30, 2017 | 2,338 | $ | 12.10 | 2,338 | $ | 165,462 | ||||||||
Total | 6,024 | $ | 12.55 | 6,024 | $ | 165,462 |
(a) | As disclosed on the Form 8-K dated December 15, 2015, represents the amount outstanding under our $250,000 common stock repurchase program, which has no scheduled expiration date. |
Exhibit No. | Description | |
3.1 | Sixth Amended and Restated Bylaws of the Registrant (Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on July 20, 2012). | |
3.2 | Amendment No. 1 to the Sixth Amended and Restated Bylaws of the Registrant, dated February 11, 2014 (Incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 12, 2014). | |
3.3 | Amendment No. 2 to the Sixth Amended and Restated Bylaws of the Registrant, dated May 25, 2017 (filed herewith). | |
31.1 | Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith). | |
31.2 | Certification of Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith). | |
32.1 | Certification of President and Chief Executive Officer and Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 (furnished herewith). | |
101 | Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) Income for the Three-Month Periods and Six-Month Periods Ended June 30, 2017 and 2016, (iii) Condensed Consolidated Statements of Equity for the Six-Month Periods Ended June 30, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2017 and 2016, and (v) Notes to Condensed Consolidated Financial Statements. |
By: | /s/ STEVEN P. GRIMES | |
Steven P. Grimes | ||
President and Chief Executive Officer | ||
Date: | August 2, 2017 | |
By: | /s/ HEATH R. FEAR | |
Heath R. Fear | ||
Executive Vice President, | ||
Chief Financial Officer and Treasurer (Principal Financial Officer) | ||
Date: | August 2, 2017 | |
By: | /s/ JULIE M. SWINEHART | |
Julie M. Swinehart | ||
Senior Vice President and Chief Accounting Officer | ||
(Principal Accounting Officer) | ||
Date: | August 2, 2017 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Retail Properties of America, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ STEVEN P. GRIMES |
Steven P. Grimes | |
President and Chief Executive Officer | |
Date: | August 2, 2017 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Retail Properties of America, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ HEATH R. FEAR |
Heath R. Fear | |
Executive Vice President, | |
Chief Financial Officer and Treasurer | |
Date: | August 2, 2017 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ STEVEN P. GRIMES |
Steven P. Grimes | |
President and Chief Executive Officer | |
Date: | August 2, 2017 |
By: | /s/ HEATH R. FEAR |
Heath R. Fear | |
Executive Vice President, | |
Chief Financial Officer and Treasurer | |
Date: | August 2, 2017 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 28, 2017 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | RETAIL PROPERTIES OF AMERICA, INC. | |
Entity Central Index Key | 0001222840 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 230,942,762 |
Condensed Consolidated Balance Sheets (parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Accounts and notes receivable, allowances (in dollars) | $ 6,938 | $ 6,886 |
7.00% Series A cumulative redeemable preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, dividend rate | 7.00% | 7.00% |
Preferred stock, shares issued | 5,400 | 5,400 |
Preferred stock, shares outstanding | 5,400 | 5,400 |
Preferred stock, liquidation preference | $ 135,000 | $ 135,000 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 475,000 | 475,000 |
Common stock, shares issued | 230,943 | 236,770 |
Common stock, shares outstanding | 230,943 | 236,770 |
Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Revenues | ||||
Rental income | $ 106,017 | $ 115,194 | $ 215,991 | $ 230,454 |
Tenant recovery income | 29,524 | 29,654 | 60,310 | 60,010 |
Other property income | 1,798 | 2,378 | 4,731 | 5,401 |
Total revenues | 137,339 | 147,226 | 281,032 | 295,865 |
Expenses | ||||
Operating expenses | 21,004 | 20,092 | 42,868 | 43,153 |
Real estate taxes | 21,487 | 21,090 | 43,366 | 41,029 |
Depreciation and amortization | 52,325 | 53,443 | 105,799 | 106,839 |
Provision for impairment of investment properties | 13,034 | 4,142 | 13,034 | 6,306 |
General and administrative expenses | 10,370 | 10,773 | 21,583 | 22,179 |
Total expenses | 118,220 | 109,540 | 226,650 | 219,506 |
Operating income | 19,119 | 37,686 | 54,382 | 76,359 |
Gain on extinguishment of debt | 0 | 0 | 0 | 13,653 |
Gain on extinguishment of other liabilities | 0 | 6,978 | 0 | 6,978 |
Interest expense | (21,435) | (25,977) | (106,967) | (52,741) |
Other income, net | 451 | 302 | 456 | 427 |
(Loss) income from continuing operations | (1,865) | 18,989 | (52,129) | 44,676 |
Gain on sales of investment properties | 116,628 | 9,613 | 157,792 | 31,352 |
Net income | 114,763 | 28,602 | 105,663 | 76,028 |
Preferred stock dividends | (2,363) | (2,363) | (4,725) | (4,725) |
Net income attributable to common shareholders | $ 112,400 | $ 26,239 | $ 100,938 | $ 71,303 |
Earnings per common share – basic and diluted | ||||
Net income per common share attributable to common shareholders | $ 0.48 | $ 0.11 | $ 0.43 | $ 0.30 |
Net income | $ 114,763 | $ 28,602 | $ 105,663 | $ 76,028 |
Other comprehensive (loss) income: | ||||
Net unrealized (loss) gain on derivative instruments (Note 9) | (145) | (510) | 487 | (477) |
Comprehensive income attributable to the Company | $ 114,618 | $ 28,092 | $ 106,150 | $ 75,551 |
Weighted average number of common shares outstanding – basic | 234,243 | 236,716 | 235,269 | 236,647 |
Weighted average number of common shares outstanding – diluted | 234,818 | 236,902 | 235,842 | 236,781 |
Condensed Consolidated Statements of Equity (parenthetical) - $ / shares |
6 Months Ended | |
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Jun. 30, 2017 |
Jun. 30, 2016 |
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Distributions declared to preferred shareholders (in dollars per share) | $ 0.875 | $ 0.875 |
Distributions declared to common shareholders (in dollars per share) | $ 0.33125 | $ 0.33125 |
Organization and Basis of Presentation |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||
Organization and Basis of Presentation | ORGANIZATION AND BASIS OF PRESENTATION Retail Properties of America, Inc. (the Company) was formed on March 5, 2003 and its primary purpose is to own and operate high quality, strategically located shopping centers in the United States. The Company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended (the Code). The Company believes it qualifies for taxation as a REIT and, as such, the Company generally will not be subject to U.S. federal income tax on taxable income that is distributed to its shareholders. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax on its taxable income. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and U.S. federal income and excise taxes on its undistributed income. The Company has one wholly-owned subsidiary that has jointly elected to be treated as a taxable REIT subsidiary (TRS) and is subject to U.S. federal, state and local income taxes at regular corporate tax rates. The income tax expense incurred by the TRS did not have a material impact on the Company’s accompanying condensed consolidated financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates and assumptions have been made with respect to useful lives of assets, capitalization of development costs, fair value measurements, provision for impairment, including estimates of holding periods, capitalization rates and discount rates (where applicable), provision for income taxes, recoverable amounts of receivables, deferred taxes and initial valuations and related amortization periods of deferred costs and intangibles, particularly with respect to property acquisitions. Actual results could differ from these estimates. All share amounts and dollar amounts in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and notes thereto, are stated in thousands with the exception of per share amounts and per square foot amounts. The accompanying condensed consolidated financial statements include the accounts of the Company, as well as all wholly-owned subsidiaries and any consolidated variable interest entities (VIEs). All intercompany balances and transactions have been eliminated in consolidation. Wholly-owned subsidiaries generally consist of limited liability companies, limited partnerships and statutory trusts. The Company’s property ownership as of June 30, 2017 is summarized below:
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Summary of Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Refer to the Company’s 2016 Annual Report on Form 10-K for a summary of its significant accounting policies. Except as disclosed below, there have been no changes to the Company’s significant accounting policies in the six months ended June 30, 2017. Recently Adopted Accounting Pronouncements The Company elected to early adopt Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2017-09, Compensation – Stock Compensation, on a prospective basis as of June 30, 2017. This new pronouncement amends/clarifies guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, an entity should account for the effects of a modification unless all of the following are the same in the modified award as the original award immediately before the original award is modified: 1) the fair value; 2) the vesting conditions; and 3) the classification of the modified award as an equity instrument or a liability instrument. The existing disclosure requirements apply regardless of whether an entity is required to apply modification accounting. The adoption of this pronouncement did not have any effect on the Company’s condensed consolidated financial statements. Recently Issued Accounting Pronouncements In March 2017, the Securities and Exchange Commission issued a final rule, Exhibit Hyperlinks and HTML Format, which is effective September 1, 2017. The final rule will require registrants that file registration statements and reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings. To enable the inclusion of such hyperlinks, registrants will be required to submit all such filings in HyperText Markup Language (HTML) format. The Company expects to add hyperlinks to its exhibit index starting with the Form 10-Q for the quarter ended September 30, 2017. In May 2014 with subsequent updates issued in August 2015 and March, April, May and December 2016, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This new guidance is effective January 1, 2018, with early adoption permitted, and will replace existing revenue recognition standards. The core principle of this standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The sale of investment property and any non-lease components contained within lease agreements will be required to follow the new guidance; however, lease components of lease contracts will be subject to the Leases guidance described below. This pronouncement allows either a full or a modified retrospective method of adoption. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this guidance. While the Company anticipates additional disclosure, it does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements as it believes the majority of its revenue falls outside of the scope of this guidance; however, it will continue to evaluate this assessment until the guidance becomes effective. The Company is also evaluating whether it will adopt this guidance on a full retrospective basis or a modified retrospective basis. In February 2017, the FASB issued ASU 2017-05, Other Income–Gains and Losses from the Derecognition of Nonfinancial Assets. This new guidance is required to be adopted concurrently with the amendments in ASU 2014-09, Revenue from Contracts with Customers. The new pronouncement, which adds guidance for partial sales of nonfinancial assets and clarifies the scope of Subtopic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets, applies to the derecognition of all nonfinancial assets (including real estate) for which the counterparty is not a customer. The pronouncement requires either a retrospective or a modified retrospective method of adoption. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall. This new guidance is effective January 1, 2018 and will require companies to disclose the fair value of financial assets and financial liabilities measured at amortized cost in accordance with the exit price notion and will no longer require disclosure of the methods and significant assumptions used, including any changes, to estimate fair value. In addition, companies will be required to disclose all financial assets and financial liabilities grouped by 1) measurement category and 2) form of financial instrument. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows. This new guidance is effective January 1, 2018, with early adoption permitted, and adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. Of the eight types of cash flows discussed in the new standard, the classification of debt prepayment costs as a financing outflow will impact the Company’s condensed consolidated statements of cash flows as this item is currently reflected as an operating outflow. The pronouncement requires a retrospective transition method of adoption. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows. This new guidance is effective January 1, 2018, with early adoption permitted, and requires amounts that are generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The pronouncement requires a retrospective transition method of adoption. Upon adoption, the Company will include amounts generally described as restricted cash within the beginning-of-period, change and end-of-period total amounts on the statement of cash flows rather than within an activity on the statement of cash flows. In February 2016, the FASB issued ASU 2016-02, Leases. This new guidance is effective January 1, 2019, with early adoption permitted, and will require lessees to recognize a liability to make lease payments and a right-of-use (ROU) asset, initially measured at the present value of lease payments, for both operating and financing leases. For leases with a term of 12 months or less, lessees will be permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Upon adoption, the Company will recognize a lease liability and an ROU asset for operating leases where it is the lessee, such as ground leases and office leases. The Company is in the process of evaluating the inputs required to calculate the amounts that will be recorded on its balance sheet for each lease. For leases with a term of 12 months or less, the Company expects to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Under this new pronouncement, lessor accounting will be largely unchanged from existing GAAP; however, upon adoption of the Leases guidance, non-lease components of leases, including common area maintenance reimbursements, will be accounted for under the Revenue from Contracts with Customers guidance described above. The pronouncement requires a modified retrospective method of adoption, with some optional practical expedients. The Company expects to adopt this new guidance on January 1, 2019 and will continue to evaluate the impact of this guidance until it becomes effective. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. This new guidance is effective January 1, 2020, with early adoption permitted beginning January 1, 2019, and replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. Financial assets that are measured at amortized cost will be required to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. In addition, an entity must consider broader information in developing its expected credit loss estimate, including the use of forecasted information. Generally, the pronouncement requires a modified retrospective method of adoption. The Company will continue to evaluate the impact of this guidance until it becomes effective. |
Acquisitions |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS The Company closed on the following acquisitions during the six months ended June 30, 2017:
The Company closed on the following acquisitions during the six months ended June 30, 2016:
The following table summarizes the acquisition date values, before prorations, the Company recorded in conjunction with the acquisitions discussed above:
The above acquisitions were funded using a combination of available cash on hand, proceeds from dispositions and proceeds from the Company’s unsecured revolving line of credit. All of the acquisitions completed during 2017 were considered asset acquisitions and, as such, transaction costs were capitalized upon closing. Transaction costs related to the 2016 acquisitions that were accounted for as business combinations totaled $690 for the six months ended June 30, 2016 and are included in “General and administrative expenses” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. In addition, total revenues of $21,802 and net income attributable to common shareholders of $5,011 are included in the Company’s condensed consolidated statements of operations and other comprehensive (loss) income for the six months ended June 30, 2016 from the properties acquired during the six months ended June 30, 2016 that were accounted for as business combinations. Subsequent to June 30, 2017, the Company acquired New Hyde Park Shopping Center, a 32,300 square foot multi-tenant retail property located in the New York MSA, for a gross purchase price of $22,075. The Company has not completed the allocation of the acquisition date fair value for this property; however, it expects that this acquisition will be accounted for as an asset acquisition and that the purchase price of this property will primarily be allocated to land, building and acquired lease intangibles. Condensed Pro Forma Financial Information Disclosure of pro forma financial information is required for acquisitions accounted for as business combinations, if such financial information is available. Pro forma financial information is provided for acquisitions accounted for as business combinations completed during the period, or after such period through the financial statement issuance date, as if these acquisitions had been completed as of the beginning of the year prior to the acquisition date. Pro forma financial information is not required for asset acquisitions. The following unaudited condensed pro forma financial information is presented as if the acquisitions completed during the six months ended June 30, 2016 were completed as of January 1, 2015. The acquisition of the fee interest in the Company’s Ashland & Roosevelt multi-tenant retail operating property located in the Chicago MSA, which was acquired on April 29, 2016 for $13,850, has not been adjusted in the pro forma presentation as it was accounted for as an asset acquisition. Pro forma financial information is not presented for acquisitions completed during 2017 as they have been accounted for as asset acquisitions. These pro forma results are for comparative purposes only and are not necessarily indicative of what the Company’s actual results of operations would have been had the acquisitions occurred at the beginning of the period presented, nor are they necessarily indicative of future operating results. The unaudited condensed pro forma financial information is as follows:
Variable Interest Entities During the six months ended June 30, 2017, the Company entered into an agreement with a qualified intermediary related to a potential 1031 Exchange. The Company loaned $87,452 to the VIEs to acquire Main Street Promenade on January 13, 2017. The 1031 Exchange was completed during the three months ended June 30, 2017 and, in accordance with applicable provisions of the Code, within 180 days after the acquisition date of the property. At the completion of the 1031 Exchange, the sole membership interests of the VIEs were assigned to the Company in satisfaction of the outstanding loan, resulting in the entities being wholly owned by the Company and no longer considered VIEs. During the six months ended June 30, 2016, the Company entered into agreements with a qualified intermediary related to three 1031 Exchanges. The Company loaned $65,419, $39,215 and $23,522 to acquire Oak Brook Promenade, Tacoma South and Eastside, respectively. Each 1031 Exchange was completed during the year ended December 31, 2016 and, accordingly, no agreements remained outstanding related to 1031 Exchanges as of December 31, 2016. At the completion of the 1031 Exchanges, the sole membership interests of the VIEs were assigned to the Company and the respective outstanding loans were extinguished, resulting in the entities being wholly owned by the Company and no longer considered VIEs. Prior to the completion of the 1031 Exchanges, the Company was deemed to be the primary beneficiary of each VIE as it had the ability to direct the activities of each VIE that most significantly impact its economic performance and had all of the risks and rewards of ownership. Accordingly, the Company consolidated the VIEs. No value or income was attributed to the noncontrolling interest. The assets of the VIEs consisted of the respective investment property, Main Street Promenade, Oak Brook Promenade, Tacoma South and Eastside, which were operated by the Company. |
Dispositions |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dispositions | DISPOSITIONS The Company closed on the following dispositions during the six months ended June 30, 2017:
During the six months ended June 30, 2017, the Company also received proceeds and recognized a gain of $1,486 as a result of the receipt of the escrow related to the disposition of Maple Tree Place on August 12, 2016. The aggregate proceeds, net of closing costs and proceeds temporarily restricted related to potential 1031 Exchanges, from property dispositions and other transactions during the six months ended June 30, 2017 totaled $312,916, with aggregate gains of $157,792. The Company closed on the following dispositions during the six months ended June 30, 2016:
During the six months ended June 30, 2016, the Company disposed of an outparcel for consideration of $2,639 and recorded a gain of $1,898 from the transaction. Disposition proceeds of $2,549 were temporarily restricted related to a 1031 Exchange and are included in “Other assets, net” in the accompanying condensed consolidated balance sheets. The aggregate gains from the property dispositions and this additional transaction totaled $31,352. None of the dispositions completed during the six months ended June 30, 2017 and 2016 qualified for discontinued operations treatment. The following properties qualified for held for sale accounting treatment prior to or during the quarter ended June 30, 2017. Upon meeting all applicable GAAP criteria for held for sale accounting treatment, depreciation and amortization were ceased. In addition, the assets and liabilities associated with these properties are separately classified as held for sale in the condensed consolidated balance sheet as of June 30, 2017.
Subsequent to June 30, 2017, the Company sold Boulevard Plaza and Irmo Station for total consideration of $30,327. Century III Plaza, including the Home Depot parcel, and CVS Pharmacy – Sylacauga were classified as held for sale as of December 31, 2016. The Home Depot parcel at Century III Plaza and CVS Pharmacy – Sylacauga were sold during the six months ended June 30, 2017. The following table presents the assets and liabilities associated with the investment properties classified as held for sale:
In addition to the dispositions of Boulevard Plaza and Irmo Station, which were classified as held for sale as of June 30, 2017, the Company closed on the disposition of Hickory Ridge, a 380,600 square foot multi-tenant retail operating property, for consideration of $44,020 subsequent to June 30, 2017. |
Equity Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Compensation Plans | EQUITY COMPENSATION PLANS The Company’s 2014 Long-Term Equity Compensation Plan, subject to certain conditions, authorizes the issuance of incentive and non-qualified stock options, restricted stock and restricted stock units, stock appreciation rights and other similar awards as well as cash-based awards to the Company’s employees, non-employee directors, consultants and advisors in connection with compensation and incentive arrangements that may be established by the Company’s board of directors or executive management. The following table summarizes the Company’s unvested restricted shares as of and for the six months ended June 30, 2017:
The following table summarizes the Company’s unvested performance restricted stock units (RSUs) as of and for the six months ended June 30, 2017:
During the three months ended June 30, 2017 and 2016, the Company recorded compensation expense of $1,756 and $1,676, respectively, related to unvested restricted shares and RSUs. During the six months ended June 30, 2017 and 2016, the Company recorded compensation expense of $3,549 and $3,702, respectively, related to unvested restricted shares and RSUs. The total fair value of restricted shares vested during the six months ended June 30, 2017 was $3,986. Prior to 2013, non-employee directors had been granted options to acquire shares under the Company’s Third Amended and Restated Independent Director Stock Option and Incentive Plan. As of June 30, 2017, options to purchase 41 shares of common stock remained outstanding and exercisable. The Company did not grant any options in 2017 or 2016 and did not record any compensation expense related to stock options during the six months ended June 30, 2017 and 2016. |
Mortgages Payable |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages Payable | MORTGAGES PAYABLE The following table summarizes the Company’s mortgages payable:
During the six months ended June 30, 2017, the Company repaid or defeased mortgages payable in the total amount of $415,621, of which $101,482 related to properties that were disposed of during the period, which had a weighted average fixed interest rate of 7.24%, and made scheduled principal payments of $2,385 related to amortizing loans. Included within the total repayments and defeasances for the six months ended June 30, 2017 is the defeasance of a portfolio of mortgages payable with a principal balance of $379,435 as of December 31, 2016 that was cross-collateralized by 45 properties and scheduled to mature in 2019 (known as the IW JV portfolio of mortgages payable). The Company incurred a defeasance premium and associated fees totaling $60,198 in connection with this transaction, which are included within “Interest expense” in the accompanying condensed consolidated statements of operations and other comprehensive (loss) income. As a result, the 45 properties that secured the mortgages payable as of December 31, 2016 are no longer encumbered by mortgages. Debt Maturities The following table shows the scheduled maturities and principal amortization of the Company’s indebtedness as of June 30, 2017 for the remainder of 2017, each of the next four years and thereafter and the weighted average interest rates by year. The table does not reflect the impact of any debt activity that occurred after June 30, 2017.
The Company plans on addressing its debt maturities through a combination of proceeds from asset dispositions, capital markets transactions and its unsecured revolving line of credit. |
Unsecured Notes Payable |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unsecured Notes Payable | UNSECURED NOTES PAYABLE The following table summarizes the Company’s unsecured notes payable:
Notes Due 2026 and 2028 The note purchase agreement governing the 4.08% senior unsecured notes due 2026 and the 4.24% senior unsecured notes due 2028 (Notes Due 2026 and 2028) contains customary covenants and events of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) a minimum interest coverage ratio; (iii) an unencumbered interest coverage ratio (as set forth in the Company’s unsecured credit facility and the note purchase agreement governing the Notes Due 2021 and 2024); and (iv) a fixed charge coverage ratio (as set forth in the Company’s unsecured credit facility). Notes Due 2025 The indenture, as supplemented, governing the 4.00% senior unsecured notes due 2025 (Notes Due 2025) (the Indenture) contains customary covenants and events of default. Pursuant to the terms of the Indenture, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum secured and total leverage ratios; (ii) a debt service coverage ratio; and (iii) maintenance of an unencumbered assets to unsecured debt ratio. Notes Due 2021 and 2024 The note purchase agreement governing the 4.12% senior unsecured notes due 2021 and the 4.58% senior unsecured notes due 2024 (Notes Due 2021 and 2024) contains customary covenants and events of default. Pursuant to the terms of the note purchase agreement, the Company is subject to various financial covenants, some of which are based upon the financial covenants in effect in the Company’s unsecured credit facility, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; (ii) minimum interest coverage and unencumbered interest coverage ratios; and (iii) a minimum consolidated net worth. As of June 30, 2017, management believes the Company was in compliance with the financial covenants under the Indenture and the note purchase agreements. |
Unsecured Term Loans and Revolving Line of Credit |
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Line of Credit Facility [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unsecured Term Loans and Revolving Line of Credit | UNSECURED TERM LOANS AND REVOLVING LINE OF CREDIT The following table summarizes the Company’s term loans and revolving line of credit:
Unsecured Credit Facility On January 6, 2016, the Company entered into its fourth amended and restated unsecured credit agreement (Unsecured Credit Agreement) with a syndicate of financial institutions led by KeyBank National Association serving as administrative agent and Wells Fargo Bank, National Association serving as syndication agent to provide for an unsecured credit facility aggregating $1,200,000 (Unsecured Credit Facility). The Unsecured Credit Facility consists of a $750,000 unsecured revolving line of credit, a $250,000 unsecured term loan and a $200,000 unsecured term loan and is priced on a leverage grid at a rate of LIBOR plus a credit spread. The Company received investment grade credit ratings from Moody’s and Standard & Poor’s in 2014. In accordance with the unsecured credit agreement, the Company may elect to convert to an investment grade pricing grid. As of June 30, 2017, making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid. The following table summarizes the key terms of the Unsecured Credit Facility:
The Unsecured Credit Facility has a $400,000 accordion option that allows the Company, at its election, to increase the total credit facility up to $1,600,000, subject to (i) customary fees and conditions including, but not limited to, the absence of an event of default as defined in the Unsecured Credit Agreement and (ii) the Company’s ability to obtain additional lender commitments. The Unsecured Credit Agreement contains customary covenants and events of default. Pursuant to the terms of the Unsecured Credit Agreement, the Company is subject to various financial covenants, including the requirement to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of June 30, 2017, management believes the Company was in compliance with the financial covenants and default provisions under the Unsecured Credit Agreement. Term Loan Due 2023 On January 3, 2017, the Company received funding on a seven-year $200,000 unsecured term loan with a group of financial institutions, which closed during the year ended December 31, 2016. The Term Loan Due 2023 is priced on a leverage grid at a rate of LIBOR plus a credit spread. In accordance with the term loan agreement (Term Loan Agreement), the Company may elect to convert to an investment grade pricing grid. As of June 30, 2017, making such an election would have resulted in a higher interest rate and, as such, the Company has not made the election to convert to an investment grade pricing grid. The following table summarizes the key terms of the Term Loan Due 2023:
The Term Loan Due 2023 has a $100,000 accordion option that allows the Company, at its election, to increase the total unsecured term loan up to $300,000, subject to customary fees and conditions, including the absence of an event of default as defined in the Term Loan Agreement. The Term Loan Agreement contains customary covenants and events of default, including financial covenants that require the Company to maintain the following: (i) maximum unencumbered, secured and consolidated leverage ratios; and (ii) minimum fixed charge and unencumbered interest coverage ratios. As of June 30, 2017, management believes the Company was in compliance with the financial covenants and default provisions under the Term Loan Agreement. |
Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | DERIVATIVES The Company’s objective in using interest rate derivatives is to manage its exposure to interest rate movements and add stability to interest expense. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the agreement without exchange of the underlying notional amount. As of June 30, 2017, the Company utilized four interest rate swaps to hedge the variable cash flows associated with variable rate debt. The effective portion of changes in the fair value of derivatives that are designated and that qualify as cash flow hedges is recorded in “Accumulated other comprehensive income” and is reclassified to interest expense as interest payments are made on the Company’s variable rate debt. Over the next 12 months, the Company estimates that an additional $946 will be reclassified as a decrease to interest expense. The ineffective portion of the change in fair value of derivatives is recognized directly in earnings. The following table summarizes the Company’s interest rate swaps as of June 30, 2017, which effectively convert one-month floating rate LIBOR to a fixed rate:
The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:
The table below presents the estimated fair value of the Company’s derivative financial instruments, which are presented within “Other assets, net” in the condensed consolidated balance sheets. The valuation techniques utilized are described in Note 13 to the condensed consolidated financial statements.
The following table presents the effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations and other comprehensive (loss) income:
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Equity |
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Equity [Abstract] | |
Equity | EQUITY In December 2015, the Company entered into an at-the-market (ATM) equity program under which it may issue and sell shares of its Class A common stock, having an aggregate offering price of up to $250,000, from time to time. Actual sales may depend on a variety of factors, including, among others, market conditions and the trading price of the Company’s Class A common stock. Any net proceeds are expected to be used for general corporate purposes, which may include the funding of acquisitions and redevelopment activities and the repayment of debt, including the Company’s unsecured revolving line of credit. The Company did not sell any shares under its ATM equity program during the six months ended June 30, 2017 and 2016. As of June 30, 2017, the Company had Class A common shares having an aggregate offering price of up to $250,000 remaining available for sale under its ATM equity program. In December 2015, the Company’s board of directors authorized a common stock repurchase program under which the Company may repurchase, from time to time, up to a maximum of $250,000 of shares of its Class A common stock. The shares may be repurchased in the open market or in privately negotiated transactions and are canceled upon repurchase. The timing and actual number of shares repurchased will depend on a variety of factors, including price in absolute terms and in relation to the value of the Company’s assets, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The common stock repurchase program may be suspended or terminated at any time without prior notice. The Company did not repurchase any shares during the six months ended June 30, 2016. During the three and six months ended June 30, 2017, the Company repurchased 6,024 shares at an average price per share of $12.55 for a total of $75,697. As of June 30, 2017, $165,462 remained available under the repurchase program. |
Earnings per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | EARNINGS PER SHARE The following table summarizes the components used in the calculation of basic and diluted earnings per share (EPS):
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Provision for Impairment of Investment Properties |
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Impairment or Disposal of Tangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for Impairment of Investment Properties | PROVISION FOR IMPAIRMENT OF INVESTMENT PROPERTIES As of June 30, 2017 and 2016, the Company identified indicators of impairment at certain of its properties. Such indicators included a low occupancy rate, difficulty in leasing space and related cost of re-leasing, financially troubled tenants or reduced anticipated holding periods. The following table summarizes the results of these analyses as of June 30, 2017 and 2016:
The Company recorded the following investment property impairment charges during the six months ended June 30, 2017:
The Company recorded the following investment property impairment charges during the six months ended June 30, 2016:
The Company provides no assurance that material impairment charges with respect to its investment properties will not occur in future periods. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair Value of Financial Instruments The following table presents the carrying value and estimated fair value of the Company’s financial instruments:
The carrying value of the derivative asset is included in “Other assets, net” in the accompanying condensed consolidated balance sheets. Recurring Fair Value Measurements The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.
Derivative asset: The fair value of the derivative asset is determined using a discounted cash flow analysis on the expected future cash flows of each derivative. This analysis utilizes observable market data including forward yield curves and implied volatilities to determine the market’s expectation of the future cash flows of the variable component. The fixed and variable components of the derivative are then discounted using calculated discount factors developed based on the LIBOR swap rate and are aggregated to arrive at a single valuation for the period. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. 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, 2017 and December 31, 2016, 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. As a result, the Company has determined that its derivative valuations in their entirety are classified within Level 2 of the fair value hierarchy. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements. The Company’s derivative instruments are further described in Note 9 to the condensed consolidated financial statements. Nonrecurring Fair Value Measurements The following table presents the Company’s assets remeasured at fair value on a nonrecurring basis as of June 30, 2017 and December 31, 2016, aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to properties remeasured to fair value as a result of impairment charges recorded during the six months ended June 30, 2017 and the year ended December 31, 2016, except for those properties sold prior to June 30, 2017 and December 31, 2016, respectively. Methods and assumptions used to estimate the fair value of these assets are described after the table.
Fair Value Disclosures The following table presents the Company’s financial liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.
Mortgages payable, net: The Company estimates the fair value of its mortgages payable by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rate for each of the Company’s individual mortgages payable based upon the specific terms of the agreement, including the term to maturity, the quality and nature of the underlying property and its leverage ratio. The rates used range from 2.9% to 4.2% and 2.9% to 4.6% as of June 30, 2017 and December 31, 2016, respectively. Unsecured notes payable, net: The quoted market price as of June 30, 2017 was used to value the Notes Due 2025. The Company estimates the fair value of its Notes Due 2021 and 2024 and Notes Due 2026 and 2028 by discounting the future cash flows at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The weighted average rates used were 4.35% and 4.48% as of June 30, 2017 and December 31, 2016, respectively. Unsecured term loans, net: The Company estimates the fair value of its unsecured term loans, net by discounting the anticipated future cash flows related to the credit spreads at rates currently offered to the Company by its lenders for similar instruments of comparable maturities. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The weighted average rates used to discount the credit spreads were 1.42% and 1.30% as of June 30, 2017 and December 31, 2016, respectively. Unsecured revolving line of credit: The Company estimates the fair value of its unsecured revolving line of credit by discounting the anticipated future cash flows related to the credit spreads at rates currently offered to the Company by its lenders for similar facilities of comparable maturity. The rates used are not directly observable in the marketplace and judgment is used in determining the appropriate rates. The rate used to discount the credit spreads was 1.30% as of June 30, 2017 and December 31, 2016. There were no transfers between the levels of the fair value hierarchy during the six months ended June 30, 2017. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES As of June 30, 2017, the Company had letter(s) of credit outstanding totaling $13,159 which serve as collateral for certain capital improvements and performance obligations on certain redevelopment projects, which will be satisfied upon completion of the projects, and reduced the available borrowings on its unsecured revolving line of credit. As of June 30, 2017, the Company had begun redevelopment activities at Reisterstown Road Plaza located in Baltimore, Maryland and Towson Circle located in Towson, Maryland. The Company estimates that it will incur net costs of approximately $9,500 to $10,500 related to the Reisterstown Road Plaza redevelopment and approximately $33,000 to $35,000 related to the Towson Circle redevelopment, of which $4,857 and $11,207, respectively, has been incurred as of June 30, 2017. |
Litigation |
6 Months Ended |
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Jun. 30, 2017 | |
Litigation Disclosure [Abstract] | |
Legal Matters and Contingencies | LITIGATION The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of such matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material effect on the Company’s condensed consolidated financial statements. |
Subsequent Events |
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Subsequent Events [Abstract] | |||||||||||||||||||||||||
Subsequent Events | SUBSEQUENT EVENTS Subsequent to June 30, 2017, the Company:
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2017, the Securities and Exchange Commission issued a final rule, Exhibit Hyperlinks and HTML Format, which is effective September 1, 2017. The final rule will require registrants that file registration statements and reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings. To enable the inclusion of such hyperlinks, registrants will be required to submit all such filings in HyperText Markup Language (HTML) format. The Company expects to add hyperlinks to its exhibit index starting with the Form 10-Q for the quarter ended September 30, 2017. In May 2014 with subsequent updates issued in August 2015 and March, April, May and December 2016, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This new guidance is effective January 1, 2018, with early adoption permitted, and will replace existing revenue recognition standards. The core principle of this standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The sale of investment property and any non-lease components contained within lease agreements will be required to follow the new guidance; however, lease components of lease contracts will be subject to the Leases guidance described below. This pronouncement allows either a full or a modified retrospective method of adoption. Expanded quantitative and qualitative disclosures regarding revenue recognition will be required for contracts that are subject to this guidance. While the Company anticipates additional disclosure, it does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements as it believes the majority of its revenue falls outside of the scope of this guidance; however, it will continue to evaluate this assessment until the guidance becomes effective. The Company is also evaluating whether it will adopt this guidance on a full retrospective basis or a modified retrospective basis. In February 2017, the FASB issued ASU 2017-05, Other Income–Gains and Losses from the Derecognition of Nonfinancial Assets. This new guidance is required to be adopted concurrently with the amendments in ASU 2014-09, Revenue from Contracts with Customers. The new pronouncement, which adds guidance for partial sales of nonfinancial assets and clarifies the scope of Subtopic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets, applies to the derecognition of all nonfinancial assets (including real estate) for which the counterparty is not a customer. The pronouncement requires either a retrospective or a modified retrospective method of adoption. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall. This new guidance is effective January 1, 2018 and will require companies to disclose the fair value of financial assets and financial liabilities measured at amortized cost in accordance with the exit price notion and will no longer require disclosure of the methods and significant assumptions used, including any changes, to estimate fair value. In addition, companies will be required to disclose all financial assets and financial liabilities grouped by 1) measurement category and 2) form of financial instrument. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows. This new guidance is effective January 1, 2018, with early adoption permitted, and adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. Of the eight types of cash flows discussed in the new standard, the classification of debt prepayment costs as a financing outflow will impact the Company’s condensed consolidated statements of cash flows as this item is currently reflected as an operating outflow. The pronouncement requires a retrospective transition method of adoption. The Company does not expect the adoption of this pronouncement will have a material effect on its condensed consolidated financial statements; however, it will continue to evaluate this assessment until the guidance becomes effective. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows. This new guidance is effective January 1, 2018, with early adoption permitted, and requires amounts that are generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The pronouncement requires a retrospective transition method of adoption. Upon adoption, the Company will include amounts generally described as restricted cash within the beginning-of-period, change and end-of-period total amounts on the statement of cash flows rather than within an activity on the statement of cash flows. In February 2016, the FASB issued ASU 2016-02, Leases. This new guidance is effective January 1, 2019, with early adoption permitted, and will require lessees to recognize a liability to make lease payments and a right-of-use (ROU) asset, initially measured at the present value of lease payments, for both operating and financing leases. For leases with a term of 12 months or less, lessees will be permitted to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Upon adoption, the Company will recognize a lease liability and an ROU asset for operating leases where it is the lessee, such as ground leases and office leases. The Company is in the process of evaluating the inputs required to calculate the amounts that will be recorded on its balance sheet for each lease. For leases with a term of 12 months or less, the Company expects to make an accounting policy election by class of underlying asset to not recognize lease liabilities and lease assets. Under this new pronouncement, lessor accounting will be largely unchanged from existing GAAP; however, upon adoption of the Leases guidance, non-lease components of leases, including common area maintenance reimbursements, will be accounted for under the Revenue from Contracts with Customers guidance described above. The pronouncement requires a modified retrospective method of adoption, with some optional practical expedients. The Company expects to adopt this new guidance on January 1, 2019 and will continue to evaluate the impact of this guidance until it becomes effective. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. This new guidance is effective January 1, 2020, with early adoption permitted beginning January 1, 2019, and replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. Financial assets that are measured at amortized cost will be required to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. In addition, an entity must consider broader information in developing its expected credit loss estimate, including the use of forecasted information. Generally, the pronouncement requires a modified retrospective method of adoption. The Company will continue to evaluate the impact of this guidance until it becomes effective. |
Organization and Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||
Summary of property ownership | The Company’s property ownership as of June 30, 2017 is summarized below:
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Acquisitions (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of acquisitions | The Company closed on the following acquisitions during the six months ended June 30, 2017:
The Company closed on the following acquisitions during the six months ended June 30, 2016:
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Schedule of acquisition date fair values | The following table summarizes the acquisition date values, before prorations, the Company recorded in conjunction with the acquisitions discussed above:
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed pro forma financial information | The unaudited condensed pro forma financial information is as follows:
|
Dispositions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property dispositions | The Company closed on the following dispositions during the six months ended June 30, 2017:
The Company closed on the following dispositions during the six months ended June 30, 2016:
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Schedule of assets and liabilities associated with investment properties held for sale | The following properties qualified for held for sale accounting treatment prior to or during the quarter ended June 30, 2017. Upon meeting all applicable GAAP criteria for held for sale accounting treatment, depreciation and amortization were ceased. In addition, the assets and liabilities associated with these properties are separately classified as held for sale in the condensed consolidated balance sheet as of June 30, 2017.
The following table presents the assets and liabilities associated with the investment properties classified as held for sale:
|
Equity Compensation Plans (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of unvested restricted shares and restricted stock units | The following table summarizes the Company’s unvested restricted shares as of and for the six months ended June 30, 2017:
The following table summarizes the Company’s unvested performance restricted stock units (RSUs) as of and for the six months ended June 30, 2017:
|
Mortgages Payable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of mortgages payable | The following table summarizes the Company’s mortgages payable:
The following table summarizes the key terms of the Term Loan Due 2023:
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Summary of scheduled maturities and principal amortization of indebtedness | The following table shows the scheduled maturities and principal amortization of the Company’s indebtedness as of June 30, 2017 for the remainder of 2017, each of the next four years and thereafter and the weighted average interest rates by year. The table does not reflect the impact of any debt activity that occurred after June 30, 2017.
|
Unsecured Notes Payable (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of unsecured notes payable | The following table summarizes the Company’s unsecured notes payable:
The following table summarizes the Company’s term loans and revolving line of credit:
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Unsecured Term Loans and Revolving Line of Credit (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of term loans and revolving line of credit | The following table summarizes the Company’s unsecured notes payable:
The following table summarizes the Company’s term loans and revolving line of credit:
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Summary of unsecured credit facility | The following table summarizes the key terms of the Unsecured Credit Facility:
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Summary of Term Loan Due 2023 | The following table summarizes the Company’s mortgages payable:
The following table summarizes the key terms of the Term Loan Due 2023:
|
Derivatives (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments | The following table summarizes the Company’s interest rate swaps as of June 30, 2017, which effectively convert one-month floating rate LIBOR to a fixed rate:
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Schedule of interest rate swaps designated as cash flow hedges | The following table summarizes the Company’s interest rate swaps that were designated as cash flow hedges of interest rate risk:
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Schedule of estimated fair value of derivative instruments | The table below presents the estimated fair value of the Company’s derivative financial instruments, which are presented within “Other assets, net” in the condensed consolidated balance sheets. The valuation techniques utilized are described in Note 13 to the condensed consolidated financial statements.
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Schedule of effect of derivative instruments on the consolidated statements of operations | The following table presents the effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations and other comprehensive (loss) income:
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Earnings per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components used in the calculation of basic and diluted EPS | The following table summarizes the components used in the calculation of basic and diluted earnings per share (EPS):
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Provision for Impairment of Investment Properties (Tables) |
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Impairment or Disposal of Tangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of identified impairment indicators | As of June 30, 2017 and 2016, the Company identified indicators of impairment at certain of its properties. Such indicators included a low occupancy rate, difficulty in leasing space and related cost of re-leasing, financially troubled tenants or reduced anticipated holding periods. The following table summarizes the results of these analyses as of June 30, 2017 and 2016:
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Schedule of investment property impairment charges | The Company recorded the following investment property impairment charges during the six months ended June 30, 2017:
The Company recorded the following investment property impairment charges during the six months ended June 30, 2016:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of carrying value and estimated fair value of financial instruments | The following table presents the carrying value and estimated fair value of the Company’s financial instruments:
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Schedule of financial instruments measured at fair value on a recurring basis | The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.
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Schedule of assets measured at fair value on a nonrecurring basis | The following table presents the Company’s assets remeasured at fair value on a nonrecurring basis as of June 30, 2017 and December 31, 2016, aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to properties remeasured to fair value as a result of impairment charges recorded during the six months ended June 30, 2017 and the year ended December 31, 2016, except for those properties sold prior to June 30, 2017 and December 31, 2016, respectively. Methods and assumptions used to estimate the fair value of these assets are described after the table.
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Schedule of financial liabilities measured at fair value for disclosure purposes | The following table presents the Company’s financial liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.
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Acquisitions - Condensed Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Apr. 29, 2016 |
Jun. 30, 2016 |
Jun. 30, 2016 |
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Pro Forma Information [Line Items] | |||
Total revenues | $ 147,813 | $ 300,126 | |
Net income | 28,559 | 74,975 | |
Net income attributable to common shareholders | $ 26,196 | $ 70,250 | |
Earnings per common share – basic and diluted | |||
Net income per common share attributable to common shareholders | $ 0.11 | $ 0.30 | |
Weighted average number of common shares outstanding – basic | 236,716 | 236,647 | |
Ashland & Roosevelt - Fee Interest | |||
Pro Forma Information [Line Items] | |||
Purchase price of asset acquisition | $ 13,850 |
Acquisitions - Variable Interest Entities (Details) - VIE $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016
USD ($)
agreements
|
Jun. 30, 2017
days
|
Jan. 13, 2017
USD ($)
|
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Variable Interest Entity [Line Items] | |||
Number of days to complete tax-deferred exchange | days | 180 | ||
Number of 1031 Exchange agreements | agreements | 3 | ||
Main Street Promenade | |||
Variable Interest Entity [Line Items] | |||
Amount loaned to VIE for acquisition | $ 87,452 | ||
Oak Brook Promenade | |||
Variable Interest Entity [Line Items] | |||
Amount loaned to VIE for acquisition | $ 65,419 | ||
Tacoma South | |||
Variable Interest Entity [Line Items] | |||
Amount loaned to VIE for acquisition | 39,215 | ||
Eastside | |||
Variable Interest Entity [Line Items] | |||
Amount loaned to VIE for acquisition | $ 23,522 |
Derivatives - Interest Rate Swaps Designated as Cash Flow Hedges (Details) - Interest rate swaps - Cash flow hedges $ in Thousands |
Jun. 30, 2017
USD ($)
instrument
|
Dec. 31, 2016
USD ($)
instrument
|
---|---|---|
Derivative [Line Items] | ||
Number of instruments | instrument | 4 | 2 |
Notional | $ | $ 450,000 | $ 250,000 |
Derivatives - Estimated Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Interest rate swaps | Cash flow hedges | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of derivative asset | $ 1,219 | $ 743 |
Derivatives - Effect on Statements of Operations (Details) - Interest rate swaps - Cash flow hedges - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Derivative Instruments, (Gain) Loss [Line Items] | ||||
Amount of loss (gain) recognized in other comprehensive income on derivative (effective portion) | $ 59 | $ 634 | $ (413) | $ 687 |
Amount of (gain) loss reclassified from AOCI into income (effective portion) | (86) | 124 | 74 | 210 |
Amount of loss recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) | $ 5 | $ 3 | $ 11 | $ 3 |
Equity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |
---|---|---|---|---|
Dec. 31, 2015 |
Jun. 30, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
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Class of Stock [Line Items] | ||||
Amount paid for shares repurchased | $ 75,697 | $ 0 | ||
2015 ATM Equity Program | ||||
Class of Stock [Line Items] | ||||
Maximum aggregate offering price | $ 250,000 | |||
Aggregate offering price of remaining common shares available for sale | $ 250,000 | $ 250,000 | ||
2015 Share Repurchase Program | ||||
Class of Stock [Line Items] | ||||
Maximum authorized amount for stock repurchases | $ 250,000 | |||
Number of shares repurchased | 6,024 | 6,024 | ||
Average repurchase price per share | $ 12.55 | $ 12.55 | ||
Amount paid for shares repurchased | $ 75,697 | $ 75,697 | ||
Remaining authorized repurchase amount | $ 165,462 | $ 165,462 |
Provision for Impairment of Investment Properties - Impairment Indicators (Details) - property |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Number of properties for which indicators of impairment were identified | 7 | 6 |
Number of properties for which an impairment charge was recorded | 2 | 1 |
Number of properties held for sale with impairment indicators but not impaired | 2 | 2 |
Remaining properties for which indicators of impairment were identified but no impairment was considered necessary | 3 | 3 |
Weighted average percentage by which projected undiscounted cash flows exceeded carrying value for each of the remaining properties | 11.00% | 70.00% |
Number of properties with impairment indicators which were subsequently sold | 2 | 3 |
Fair Value Measurements - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Financial liabilities: | ||
Mortgages payable, net | $ 355,239 | $ 769,184 |
Unsecured notes payable, net | 695,441 | 695,143 |
Unsecured term loans, net | 646,554 | 447,598 |
Unsecured revolving line of credit | 182,000 | 86,000 |
Carrying value | ||
Financial assets: | ||
Derivative asset | 1,219 | 743 |
Financial liabilities: | ||
Mortgages payable, net | 355,239 | 769,184 |
Unsecured notes payable, net | 695,441 | 695,143 |
Unsecured term loans, net | 646,554 | 447,598 |
Unsecured revolving line of credit | 182,000 | 86,000 |
Fair value | ||
Financial assets: | ||
Derivative asset | 1,219 | 743 |
Financial liabilities: | ||
Mortgages payable, net | 373,975 | 833,210 |
Unsecured notes payable, net | 692,274 | 679,212 |
Unsecured term loans, net | 650,273 | 450,421 |
Unsecured revolving line of credit | $ 182,231 | $ 86,130 |
Fair Value Measurements - Recurring Fair Value Measurements (Details) - Recurring Fair Value Measurements - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value Measurements [Line Items] | ||
Derivative asset | $ 1,219 | $ 743 |
Fair value, Level 2 | ||
Fair Value Measurements [Line Items] | ||
Derivative asset | $ 1,219 | $ 743 |
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