Maryland | 000-52596 | 30-0309068 | ||
(State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) |
518 Seventeenth Street, 17th Floor, Denver CO | 80202 | |
(Address of Principal Executive Offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description | |
99.1* |
Black Creek Diversified Property Fund Inc. | ||
March 7, 2018 | ||
By: | /s/ M. KIRK SCOTT | |
M. Kirk Scott Managing Director, Chief Financial Officer and Treasurer |
PERFORMANCE |
• | Total return of 0.60% for the quarter; 2.66% for the last 12 months. |
• | Repaid two senior mortgage notes for $79.7 million with a weighted average interest rate of 3.59%. |
• | Sold six properties aggregating approximately 1.0 million square feet for net proceeds of $230.1 million. |
• | Percentage leased of 87.0% as of December 31, 2017 (or 84.2% leased if weighted by the fair value of each segment). |
• | Paid a weighted-average distribution rate of $0.0897 per share. |
Shareholder Returns (before class specific expenses) | Key Statistics | ||||||||||||
Q4 2017 | Year-to-Date | 1-Year | 3-Year | Since Inception - Annualized(5) | As of December 31, 2017 | ||||||||
Fair Value(1) of Investments | $ 2,065.2 million | ||||||||||||
Number of Real Properties | 48 | ||||||||||||
Number of Real Property Markets | 19 | ||||||||||||
Total Square Feet | 7.6 million | ||||||||||||
Distribution returns(3)(4) | 1.21% | 4.80% | 4.80% | 4.98% | 5.12% | Number of Tenants | 471 | ||||||
Net change in NAV, per share(4) | (0.61)% | (2.14)% | (2.14)% | 1.12% | 2.10% | Percentage Leased | 87.0 | % | |||||
Total return(4)(5) | 0.60% | 2.66% | 2.66% | 6.10% | 7.22% | Debt to Fair Value of Investments | 49.1 | % |
(1) | Unless otherwise indicated, the term "fair value" of our real estate investments as used herein refers to the fair value as determined pursuant to our valuation procedures. Refer to "Definitions" for further detail regarding our valuation procedures. |
(2) | Any market for which we do not show a corresponding percentage of our total fair value comprises 1% or less of the total fair value of our real property portfolio. |
(3) | Represents the compounded return realized from reinvested distributions before ongoing class specific expenses. We pay our dealer manager: (i) a distribution fee equal to 0.85% per annum of the aggregate NAV of our outstanding Class T and S shares; and (ii) a distribution fee equal to 0.25% per annum of the aggregate NAV of our outstanding Class D shares. |
(4) | Excludes the impact of upfront sales commissions and dealer manager fees paid with respect to certain Class T and S shares. We pay (i) upfront selling commissions of up to 3.0% and dealer manager fees of 0.5% of the transaction price of each Class T share and (ii) upfront selling commissions of up to 3.5% of the transaction price of each Class S share sold in our ongoing public primary offering. |
(5) | Total return represents the compound annual rate of return assuming reinvestment of all dividend distributions. Past performance is not a guarantee of future results. The fourth quarter of 2012 represents the first full quarter for which we have complete NAV return data. As such, we use September 30, 2012 as the “inception” date for purposes of calculating cumulative returns since inception. Investors in our fixed price offering prior to NAV inception are likely to have a lower total return. |
FINANCIAL HIGHLIGHTS |
As of or For the Three Months Ended | As of or For the Year Ended | |||||||||||||||||||||||||||
($ and shares in thousands, except per share data) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Selected Operating Data | ||||||||||||||||||||||||||||
Total revenues | $ | 44,670 | $ | 49,672 | $ | 50,265 | $ | 52,739 | $ | 53,956 | $ | 197,346 | $ | 216,170 | ||||||||||||||
Gain on sale of real property | 72,035 | 670 | 10,352 | — | 2,165 | 83,057 | 45,660 | |||||||||||||||||||||
Net income (loss) | 71,301 | (2,145 | ) | 8,415 | 1,827 | 3,357 | 79,398 | 55,048 | ||||||||||||||||||||
Net income (loss) per share | $ | 0.49 | $ | (0.01 | ) | $ | 0.05 | $ | 0.01 | $ | 0.02 | $ | 0.51 | $ | 0.31 | |||||||||||||
Weighted-average number of common shares outstanding - basic | 134,488 | 139,925 | 145,288 | 149,891 | 154,807 | 142,349 | 159,648 | |||||||||||||||||||||
Weighted-average number of common shares outstanding - diluted | 145,931 | 151,739 | 157,209 | 161,919 | 166,942 | 154,156 | 172,046 | |||||||||||||||||||||
Portfolio Statistics | ||||||||||||||||||||||||||||
Operating properties | 48 | 53 | 51 | 55 | 55 | 48 | 55 | |||||||||||||||||||||
Square feet | 7,560 | 8,569 | 8,315 | 8,971 | 8,971 | 7,560 | 8,971 | |||||||||||||||||||||
Percentage leased at end of period | 87.0 | % | 89.5 | % | 86.9 | % | 87.8 | % | 91.2 | % | 87.0 | % | 91.2 | % | ||||||||||||||
Non-GAAP Supplemental Financial Measures | ||||||||||||||||||||||||||||
Net operating income ("NOI") (1) | 29,484 | 31,962 | 33,475 | 35,065 | 36,523 | 129,986 | 149,640 | |||||||||||||||||||||
Funds from Operations ("FFO") per share (1) | $ | 0.09 | $ | 0.09 | $ | 0.11 | $ | 0.12 | $ | 0.13 | $ | 0.42 | $ | 0.53 | ||||||||||||||
Net Asset Value ("NAV") | ||||||||||||||||||||||||||||
NAV per share at the end of period | $ | 7.41 | $ | 7.45 | $ | 7.50 | $ | 7.52 | $ | 7.57 | $ | 7.41 | $ | 7.57 | ||||||||||||||
Weighted-average distributions per share | $ | 0.0897 | $ | 0.0892 | $ | 0.0891 | $ | 0.0891 | $ | 0.0892 | $ | 0.3571 | $ | 0.3571 | ||||||||||||||
Weighted-average closing dividend yield - annualized | 4.84 | % | 4.78 | % | 4.75 | % | 4.74 | % | 4.71 | % | 4.84 | % | 4.72 | % | ||||||||||||||
Weighted-average total return for the period | 0.60 | % | 0.70 | % | 0.87 | % | 0.55 | % | 2.45 | % | 2.66 | % | 6.31 | % | ||||||||||||||
Aggregate fund NAV at end of period | $ | 1,064,398 | $ | 1,129,437 | $ | 1,137,640 | $ | 1,184,021 | $ | 1,229,300 | $ | 1,064,398 | $ | 1,229,300 | ||||||||||||||
Consolidated Debt | ||||||||||||||||||||||||||||
Leverage | 49.1 | % | 50.5 | % | 49.1 | % | 47.7 | % | 45.9 | % | 49.1 | % | 45.9 | % | ||||||||||||||
Weighted-average stated interest rate of total borrowings | 3.6 | % | 3.4 | % | 3.3 | % | 3.2 | % | 3.4 | % | 3.6 | % | 3.4 | % | ||||||||||||||
Secured borrowings | $ | 401,894 | $ | 482,034 | $ | 383,852 | $ | 360,063 | $ | 343,470 | $ | 401,894 | $ | 343,470 | ||||||||||||||
Secured borrowings as % of total borrowings | 39 | % | 42 | % | 35 | % | 33 | % | 33 | % | 39 | % | 33 | % | ||||||||||||||
Unsecured borrowings | $ | 617,000 | $ | 677,000 | $ | 728,000 | $ | 735,000 | $ | 711,000 | $ | 617,000 | $ | 711,000 | ||||||||||||||
Unsecured borrowings as % of total borrowings | 61 | % | 58 | % | 65 | % | 67 | % | 67 | % | 61 | % | 67 | % | ||||||||||||||
Fixed rate borrowings (2) | $ | 473,794 | $ | 478,934 | $ | 479,352 | $ | 542,593 | $ | 653,093 | $ | 473,794 | $ | 653,093 | ||||||||||||||
Fixed rate borrowings as % of total borrowings | 47 | % | 41 | % | 43 | % | 50 | % | 62 | % | 47 | % | 62 | % | ||||||||||||||
Floating rate borrowings | $ | 545,100 | $ | 680,100 | $ | 632,500 | $ | 552,470 | $ | 401,377 | $ | 545,100 | $ | 401,377 | ||||||||||||||
Floating rate borrowings as % of total borrowings | 53 | % | 59 | % | 57 | % | 50 | % | 38 | % | 53 | % | 38 | % | ||||||||||||||
Total borrowings | $ | 1,018,894 | $ | 1,159,034 | $ | 1,111,852 | $ | 1,095,063 | $ | 1,054,470 | $ | 1,018,894 | $ | 1,054,470 | ||||||||||||||
Net GAAP adjustments (3) | $ | (6,786 | ) | $ | (7,533 | ) | $ | (6,700 | ) | $ | (6,618 | ) | $ | (5,669 | ) | $ | (6,786 | ) | $ | (5,669 | ) | |||||||
Total borrowings (GAAP Basis) | $ | 1,012,108 | $ | 1,151,501 | $ | 1,105,152 | $ | 1,088,445 | $ | 1,048,801 | $ | 1,012,108 | $ | 1,048,801 |
(1) | NOI and FFO are non-GAAP measures. See "Results From Operations" for a reconciliation of NOI to GAAP net income (loss) and "Fund From Operations" for a reconciliation of GAAP net income (loss) to FFO. |
(2) | Fixed rate borrowings presented includes floating rate borrowings that are effectively fixed by a derivative instrument such as a swap through maturity or substantially through maturity. |
(3) | Include net deferred issuance costs and mark-to-market adjustments on assumed debt. These items are included in debt on our consolidated balance sheets in accordance with GAAP. |
NET ASSET VALUE |
As of | ||||||||||||||||||||
(in thousands, except per share data) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||
Office properties | $ | 1,148,200 | $ | 1,190,050 | $ | 1,187,550 | $ | 1,186,100 | $ | 1,187,600 | ||||||||||
Retail properties | 851,000 | 1,006,500 | 1,007,600 | 1,013,300 | 1,012,850 | |||||||||||||||
Industrial properties | 66,000 | 86,550 | 54,850 | 81,050 | 81,750 | |||||||||||||||
Total investments | 2,065,200 | 2,283,100 | 2,250,000 | 2,280,450 | 2,282,200 | |||||||||||||||
Cash and other assets, net of other liabilities | 17,772 | 5,916 | (508 | ) | 1,233 | 5,158 | ||||||||||||||
Debt obligations | (1,018,574 | ) | (1,159,579 | ) | (1,111,852 | ) | (1,095,063 | ) | (1,054,470 | ) | ||||||||||
Outside investors' interests | — | — | — | (2,599 | ) | (3,588 | ) | |||||||||||||
Aggregate Fund NAV | $ | 1,064,398 | $ | 1,129,437 | $ | 1,137,640 | $ | 1,184,021 | $ | 1,229,300 | ||||||||||
Total Fund Interests outstanding | 143,692 | 151,550 | 151,738 | 157,409 | 162,396 | |||||||||||||||
NAV Per Fund Interest | $ | 7.41 | $ | 7.45 | $ | 7.50 | $ | 7.52 | $ | 7.57 |
NET ASSET VALUE (continued) |
Three Months Ended | Year Ended | |||||||||||||||||||||||
(in thousands, except per share data) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||
NAV as of beginning of period | $ | 1,129,437 | $ | 1,137,640 | $ | 1,184,021 | $ | 1,229,300 | $ | 1,229,300 | $ | 1,317,839 | ||||||||||||
Fund level changes to NAV | ||||||||||||||||||||||||
Realized/unrealized losses on net assets | (3,877 | ) | (6,035 | ) | (6,011 | ) | (9,067 | ) | (24,990 | ) | (4,283 | ) | ||||||||||||
Income accrual | 13,500 | 16,173 | 19,923 | 19,564 | 69,160 | 97,940 | ||||||||||||||||||
Advisory fee | (3,025 | ) | (3,283 | ) | (3,431 | ) | (3,468 | ) | (13,207 | ) | (14,704 | ) | ||||||||||||
Performance based fee | — | — | — | (1 | ) | (1 | ) | (94 | ) | |||||||||||||||
Class specific changes to NAV | ||||||||||||||||||||||||
Net dividend accrual | (13,085 | ) | (13,546 | ) | (14,020 | ) | (14,448 | ) | (55,099 | ) | (61,503 | ) | ||||||||||||
Distribution and Dealer Manager fee | (43 | ) | (107 | ) | (135 | ) | (131 | ) | (416 | ) | (450 | ) | ||||||||||||
NAV as of end of period before share/unit sale/redemption activity | $ | 1,122,907 | $ | 1,130,842 | $ | 1,180,347 | $ | 1,221,749 | $ | 1,204,747 | $ | 1,334,745 | ||||||||||||
Dollar/unit sale/redemption activity | ||||||||||||||||||||||||
Amount sold | 12,095 | 9,202 | 11,535 | 11,210 | 44,042 | 112,457 | ||||||||||||||||||
Amount redeemed | (70,604 | ) | (10,607 | ) | (54,242 | ) | (48,938 | ) | (184,391 | ) | (217,902 | ) | ||||||||||||
NAV as of end of period | $ | 1,064,398 | $ | 1,129,437 | $ | 1,137,640 | $ | 1,184,021 | $ | 1,064,398 | $ | 1,229,300 | ||||||||||||
Shares outstanding beginning of period | 151,550 | 151,738 | 157,409 | 162,396 | 162,396 | 176,490 | ||||||||||||||||||
Shares/units sold | 1,627 | 1,229 | 1,535 | 1,484 | 5,875 | 15,137 | ||||||||||||||||||
Shares/units redeemed | (9,485 | ) | (1,417 | ) | (7,206 | ) | (6,471 | ) | (24,579 | ) | (29,231 | ) | ||||||||||||
Shares/units outstanding as of end of period | 143,692 | 151,550 | 151,738 | 157,409 | 143,692 | 162,396 | ||||||||||||||||||
NAV per share/unit as of beginning of period | $ | 7.45 | $ | 7.50 | $ | 7.52 | $ | 7.57 | $ | 7.57 | $ | 7.47 | ||||||||||||
Change in NAV per share/unit | (0.04 | ) | (0.05 | ) | (0.02 | ) | (0.05 | ) | (0.16 | ) | 0.10 | |||||||||||||
NAV per share/unit as of end of period | $ | 7.41 | $ | 7.45 | $ | 7.50 | $ | 7.52 | $ | 7.41 | $ | 7.57 |
PORTFOLIO PROFILE |
($ and square feet in thousands) | Office | Retail | Industrial | Total | ||||||||||||
As of December 31, 2017: | ||||||||||||||||
Number of properties | 15 | 30 | 3 | 48 | ||||||||||||
Rentable square feet | 3,274 | 3,215 | 1,071 | 7,560 | ||||||||||||
Percentage leased as of period end | 76.2 | % | 93.8 | % | 100.0 | % | 87.0 | % | ||||||||
Aggregate fair value | $ | 1,148,200 | $ | 851,000 | $ | 66,000 | $ | 2,065,200 | ||||||||
Fair value as % of total | 55.6 | % | 41.2 | % | 3.2 | % | 100.0 | % | ||||||||
For the three months ended December 31, 2017: | ||||||||||||||||
Revenue | $ | 24,142 | $ | 18,450 | $ | 1,904 | $ | 44,496 | ||||||||
NOI (1) | 13,533 | 14,405 | 1,546 | 29,484 | ||||||||||||
% of total NOI | 45.9 | % | 48.9 | % | 5.2 | % | 100.0 | % | ||||||||
NOI—cash basis (2) | $ | 10,998 | $ | 13,668 | $ | 1,504 | $ | 26,170 | ||||||||
For the year ended December 31, 2017: | ||||||||||||||||
Revenue | $ | 108,305 | $ | 81,871 | $ | 6,342 | $ | 196,518 | ||||||||
NOI (1) | 63,785 | 61,483 | 4,718 | 129,986 | ||||||||||||
% of total NOI | 49.1 | % | 47.3 | % | 3.6 | % | 100.0 | % | ||||||||
NOI—cash basis (2) | $ | 62,210 | $ | 58,285 | $ | 4,677 | $ | 125,172 |
(1) | NOI is a non-GAAP measure. See "Results From Operations" for a reconciliation of NOI to GAAP net income. |
(2) | NOI—cash basis is a non-GAAP measure. See "Results From Operations" for a reconciliation of NOI—cash basis to GAAP net income. |
BALANCE SHEETS |
As of | ||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||
ASSETS | ||||||||||||||||||||
Net investments in real estate properties | $ | 1,540,270 | $ | 1,691,854 | $ | 1,662,518 | $ | 1,695,877 | $ | 1,711,411 | ||||||||||
Debt-related investments, net | 11,147 | 11,259 | 14,941 | 15,076 | 15,209 | |||||||||||||||
Cash and cash equivalents | 10,475 | 5,841 | 5,362 | 10,894 | 13,864 | |||||||||||||||
Restricted cash | 8,541 | 8,268 | 7,160 | 8,765 | 7,282 | |||||||||||||||
Other assets | 37,673 | 40,549 | 35,297 | 36,947 | 35,962 | |||||||||||||||
Total assets | $ | 1,608,106 | $ | 1,757,771 | $ | 1,725,278 | $ | 1,767,559 | $ | 1,783,728 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Debt, net | $ | 1,012,108 | $ | 1,151,501 | $ | 1,105,152 | $ | 1,088,445 | $ | 1,048,801 | ||||||||||
Intangible lease liabilities, net | 52,629 | 55,856 | 56,637 | 58,119 | 59,545 | |||||||||||||||
Other liabilities | 50,643 | 58,917 | 57,812 | 62,635 | 67,291 | |||||||||||||||
Total liabilities | 1,115,380 | 1,266,274 | 1,219,601 | 1,209,199 | 1,175,637 | |||||||||||||||
Equity | ||||||||||||||||||||
Stockholders' equity: | ||||||||||||||||||||
Common stock | 1,325 | 1,399 | 1,399 | 1,458 | 1,506 | |||||||||||||||
Additional paid-in capital | 1,224,061 | 1,282,495 | 1,280,621 | 1,324,200 | 1,361,638 | |||||||||||||||
Distributions in excess of earnings | (818,608 | ) | (872,249 | ) | (857,792 | ) | (851,636 | ) | (839,896 | ) | ||||||||||
Accumulated other comprehensive loss | (909 | ) | (4,618 | ) | (5,550 | ) | (4,926 | ) | (6,905 | ) | ||||||||||
Total stockholders' equity | 405,869 | 407,027 | 418,678 | 469,096 | 516,343 | |||||||||||||||
Noncontrolling interests | 86,857 | 84,470 | 86,999 | 89,264 | 91,748 | |||||||||||||||
Total equity | 492,726 | 491,497 | 505,677 | 558,360 | 608,091 | |||||||||||||||
Total liabilities and equity | $ | 1,608,106 | $ | 1,757,771 | $ | 1,725,278 | $ | 1,767,559 | $ | 1,783,728 |
STATEMENTS OF OPERATIONS |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands, except per share data) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Rental revenues | $ | 44,496 | $ | 49,478 | $ | 50,036 | $ | 52,508 | $ | 53,723 | $ | 196,518 | $ | 215,227 | ||||||||||||||
Debt-related income | 174 | 194 | 229 | 231 | 233 | 828 | 943 | |||||||||||||||||||||
Total revenues | 44,670 | 49,672 | 50,265 | 52,739 | 53,956 | 197,346 | 216,170 | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Rental expenses | 15,012 | 17,516 | 16,561 | 17,443 | 17,200 | 66,532 | 65,587 | |||||||||||||||||||||
Real estate-related depreciation and amortization | 14,409 | 16,927 | 18,798 | 17,936 | 20,083 | 68,070 | 80,105 | |||||||||||||||||||||
General and administrative expenses | 2,201 | 2,760 | 2,024 | 2,250 | 2,257 | 9,235 | 9,450 | |||||||||||||||||||||
Advisory fees, related party | 3,070 | 3,274 | 3,451 | 3,490 | 3,740 | 13,285 | 14,857 | |||||||||||||||||||||
Acquisition expenses | — | — | — | — | 6 | — | 667 | |||||||||||||||||||||
Impairment of real estate property | — | — | 1,116 | — | — | 1,116 | 2,677 | |||||||||||||||||||||
Total operating expenses | 34,692 | 40,477 | 41,950 | 41,119 | 43,286 | 158,238 | 173,343 | |||||||||||||||||||||
Other income (expenses): | ||||||||||||||||||||||||||||
Interest expense | (11,112 | ) | (11,346 | ) | (10,163 | ) | (9,684 | ) | (9,388 | ) | (42,305 | ) | (40,782 | ) | ||||||||||||||
Gain on sale of real property | 72,035 | 670 | 10,352 | — | 2,165 | 83,057 | 45,660 | |||||||||||||||||||||
Other income (expense) | 400 | (664 | ) | (89 | ) | (109 | ) | (90 | ) | (462 | ) | 2,207 | ||||||||||||||||
Gain on extinguishment of debt | — | — | — | — | — | — | 5,136 | |||||||||||||||||||||
Total other income (expenses) | 61,323 | (11,340 | ) | 100 | (9,793 | ) | (7,313 | ) | 40,290 | 12,221 | ||||||||||||||||||
Net income (loss) | 71,301 | (2,145 | ) | 8,415 | 1,827 | 3,357 | 79,398 | 55,048 | ||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (5,591 | ) | 185 | (1,610 | ) | (166 | ) | (245 | ) | (7,182 | ) | (5,072 | ) | |||||||||||||||
Net income (loss) attributable to common stockholders | $ | 65,710 | $ | (1,960 | ) | $ | 6,805 | $ | 1,661 | $ | 3,112 | $ | 72,216 | $ | 49,976 | |||||||||||||
Net income (loss) per common share—basic and diluted | $ | 0.49 | $ | (0.01 | ) | $ | 0.05 | $ | 0.01 | $ | 0.02 | $ | 0.51 | $ | 0.31 | |||||||||||||
Weighted-average number of common shares outstanding | ||||||||||||||||||||||||||||
Basic | 134,488 | 139,925 | 145,288 | 149,891 | 154,807 | 142,349 | 159,648 | |||||||||||||||||||||
Diluted | 145,931 | 151,739 | 157,209 | 161,919 | 166,942 | 154,156 | 172,046 | |||||||||||||||||||||
Weighted-average distributions declared per common share | $ | 0.0897 | $ | 0.0892 | $ | 0.0891 | $ | 0.0891 | $ | 0.0892 | $ | 0.3571 | $ | 0.3571 |
FUNDS FROM OPERATIONS |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands, except for per share data and percentages) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Reconciliation of net income (loss) to FFO: | ||||||||||||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | 65,710 | $ | (1,960 | ) | $ | 6,805 | $ | 1,661 | $ | 3,112 | $ | 72,216 | $ | 49,976 | |||||||||||||
Add (deduct) NAREIT-defined adjustments: | ||||||||||||||||||||||||||||
Real estate-related depreciation and amortization | 14,409 | 16,927 | 18,798 | 17,936 | 20,083 | 68,070 | 80,105 | |||||||||||||||||||||
Impairment of real estate property | — | — | 1,116 | — | — | 1,116 | 2,677 | |||||||||||||||||||||
Gain on sale of real estate property | (72,035 | ) | (670 | ) | (10,352 | ) | — | (2,165 | ) | (83,057 | ) | (45,660 | ) | |||||||||||||||
Noncontrolling interests' share of adjustments | 4,519 | (1,266 | ) | 200 | (1,361 | ) | (1,331 | ) | 2,092 | (2,802 | ) | |||||||||||||||||
FFO attributable to common stockholders | 12,603 | 13,031 | 16,567 | 18,236 | 19,699 | 60,437 | 84,296 | |||||||||||||||||||||
FFO attributable to OP units | 1,072 | 1,100 | 1,360 | 1,463 | 1,544 | 4,995 | 6,546 | |||||||||||||||||||||
FFO | $ | 13,675 | $ | 14,131 | $ | 17,927 | $ | 19,699 | $ | 21,243 | $ | 65,432 | $ | 90,842 | ||||||||||||||
FFO per common share—basic and diluted | $ | 0.09 | $ | 0.09 | $ | 0.11 | $ | 0.12 | $ | 0.13 | $ | 0.42 | $ | 0.53 | ||||||||||||||
FFO payout ratio | 96 | % | 96 | % | 78 | % | 73 | % | 70 | % | 84 | % | 68 | % | ||||||||||||||
Weighted-average number of shares outstanding—basic | 134,488 | 139,925 | 145,288 | 149,891 | 154,807 | 142,349 | 159,648 | |||||||||||||||||||||
Weighted-average number of shares outstanding—diluted | 145,931 | 151,739 | 157,209 | 161,919 | 166,942 | 154,156 | 172,046 |
FUNDS FROM OPERATIONS (continued) |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Capital expenditures summary: | ||||||||||||||||||||||||||||
Recurring capital expenditures (1) | $ | 10,149 | $ | 10,862 | $ | 5,952 | $ | 2,801 | $ | 8,039 | $ | 29,764 | $ | 26,696 | ||||||||||||||
Non-recurring capital expenditures | 1,411 | 1,104 | 586 | 469 | 1,078 | 3,570 | 3,508 | |||||||||||||||||||||
Total capital expenditures | $ | 11,560 | $ | 11,966 | $ | 6,538 | $ | 3,270 | $ | 9,117 | $ | 33,334 | $ | 30,204 | ||||||||||||||
Other non-cash adjustments: | ||||||||||||||||||||||||||||
Straight-line rent (increase) decrease to rental revenue | $ | (2,319 | ) | $ | 109 | $ | 238 | $ | 117 | $ | 522 | $ | (1,855 | ) | $ | 1,263 | ||||||||||||
Amortization of above- and below- market rent (increase) decrease to rental revenue | (1,020 | ) | (714 | ) | (710 | ) | (559 | ) | 143 | (3,003 | ) | (535 | ) | |||||||||||||||
Amortization of loan costs and hedges - increase to interest expense | 1,334 | 1,372 | 1,074 | 1,032 | 873 | 4,812 | 3,750 | |||||||||||||||||||||
Amortization of mark-to-market adjustments on borrowings - decrease to interest expense | (34 | ) | (34 | ) | (33 | ) | (33 | ) | (33 | ) | (134 | ) | (678 | ) | ||||||||||||||
Total other non-cash adjustments | $ | (2,039 | ) | $ | 733 | $ | 569 | $ | 557 | $ | 1,505 | $ | (180 | ) | $ | 3,800 |
(1) | Recurring capital expenditures include lease incentives. Unlike other capital expenditures, we record lease incentives as other assets in our balance sheet and we classify payments for lease incentives as cash used in operating activities in our statement of cash flows. |
RESULTS FROM OPERATIONS |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||
Same store real property: | ||||||||||||||||||||||||||||
Office (1) | $ | 23,814 | $ | 26,007 | $ | 26,409 | $ | 28,289 | $ | 29,523 | $ | 104,519 | $ | 119,482 | ||||||||||||||
Retail | 16,638 | 16,300 | 16,603 | 16,967 | 17,006 | 66,508 | 65,891 | |||||||||||||||||||||
Industrial | 600 | 600 | 600 | 600 | 600 | 2,400 | 2,400 | |||||||||||||||||||||
Total same store real property revenue | 41,052 | 42,907 | 43,612 | 45,856 | 47,129 | 173,427 | 187,773 | |||||||||||||||||||||
2016/2017 Acquisitions/Dispositions | 3,444 | 6,571 | 6,424 | 6,652 | 6,594 | 23,091 | 27,454 | |||||||||||||||||||||
Total | $ | 44,496 | $ | 49,478 | $ | 50,036 | $ | 52,508 | $ | 53,723 | $ | 196,518 | $ | 215,227 | ||||||||||||||
NOI: | ||||||||||||||||||||||||||||
Same store real property: | ||||||||||||||||||||||||||||
Office | $ | 13,325 | $ | 14,862 | $ | 15,371 | $ | 17,466 | $ | 18,762 | $ | 61,024 | $ | 79,135 | ||||||||||||||
Retail | 12,859 | 11,988 | 13,019 | 12,736 | 12,761 | 50,602 | 49,702 | |||||||||||||||||||||
Industrial | 593 | 589 | 592 | 589 | 592 | 2,363 | 2,369 | |||||||||||||||||||||
Total same store real property NOI | 26,777 | 27,439 | 28,982 | 30,791 | 32,115 | 113,989 | 131,206 | |||||||||||||||||||||
2016/2017 Acquisitions/Dispositions | 2,707 | 4,523 | 4,493 | 4,274 | 4,408 | 15,997 | 18,434 | |||||||||||||||||||||
Total | $ | 29,484 | $ | 31,962 | $ | 33,475 | $ | 35,065 | $ | 36,523 | $ | 129,986 | $ | 149,640 | ||||||||||||||
NOI—cash basis: | ||||||||||||||||||||||||||||
Same store real property: | ||||||||||||||||||||||||||||
Office | $ | 10,785 | $ | 15,081 | $ | 15,728 | $ | 17,844 | $ | 20,306 | $ | 59,438 | $ | 83,279 | ||||||||||||||
Retail | 12,209 | 11,291 | 12,316 | 12,040 | 12,002 | 47,856 | 46,570 | |||||||||||||||||||||
Industrial | 606 | 597 | 591 | 588 | 591 | 2,382 | 2,329 | |||||||||||||||||||||
Total same store real property NOI—cash basis | 23,600 | 26,969 | 28,635 | 30,472 | 32,899 | 109,676 | 132,178 | |||||||||||||||||||||
2016/2017 Acquisitions/Dispositions | 2,570 | 4,396 | 4,374 | 4,156 | 4,296 | 15,496 | 18,213 | |||||||||||||||||||||
Total | $ | 26,170 | $ | 31,365 | $ | 33,009 | $ | 34,628 | $ | 37,195 | $ | 125,172 | $ | 150,391 |
(1) | In January 2017, our lease with Sybase Inc. ("Sybase"), our second largest tenant based on annualized base rent as of December 31, 2016, was terminated which had an adverse impact on our results from operations for three months and year ended December 31, 2017. Sybase had leased our entire 417,000 square foot office property in East Bay, CA ("Park Place") and, as of December 31, 2017, we have leased 17.5% of Park Place to a replacement tenant; however the lease does not commence until the first half of 2018. Please see the table below for revenue, NOI and NOI–cash basis for our same store office portfolio excluding Park Place for each of the five quarters ending December 31, 2017, and for the years ended December 31, 2017 and 2016. |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Same store office portfolio excluding Sybase: | ||||||||||||||||||||||||||||
Revenue | $ | 23,808 | $ | 25,976 | $ | 26,534 | $ | 26,730 | $ | 26,196 | $ | 103,048 | $ | 105,563 | ||||||||||||||
NOI | 14,142 | 15,655 | 16,218 | 16,515 | 15,698 | 62,530 | 65,560 | |||||||||||||||||||||
NOI–cash basis | 11,602 | 15,873 | 16,577 | 16,513 | 15,894 | 60,565 | 64,931 |
RESULTS FROM OPERATIONS (continued) |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Net income (loss) attributable to common stockholders | $ | 65,710 | $ | (1,960 | ) | $ | 6,805 | $ | 1,661 | $ | 3,112 | $ | 72,216 | $ | 49,976 | |||||||||||||
Debt-related income | (174 | ) | (194 | ) | (229 | ) | (231 | ) | (233 | ) | (828 | ) | (943 | ) | ||||||||||||||
Real estate-related depreciation and amortization expense | 14,409 | 16,927 | 18,798 | 17,936 | 20,083 | 68,070 | 80,105 | |||||||||||||||||||||
General and administrative expenses | 2,201 | 2,760 | 2,024 | 2,250 | 2,257 | 9,235 | 9,450 | |||||||||||||||||||||
Advisory fees, related party | 3,070 | 3,274 | 3,451 | 3,490 | 3,740 | 13,285 | 14,857 | |||||||||||||||||||||
Acquisition expenses | — | — | — | — | 6 | — | 667 | |||||||||||||||||||||
Impairment of real estate property | — | — | 1,116 | — | — | 1,116 | 2,677 | |||||||||||||||||||||
Interest expense | 11,112 | 11,346 | 10,163 | 9,684 | 9,388 | 42,305 | 40,782 | |||||||||||||||||||||
Gain on sale of real property | (72,035 | ) | (670 | ) | (10,352 | ) | — | (2,165 | ) | (83,057 | ) | (45,660 | ) | |||||||||||||||
Other (income) expense | (400 | ) | 664 | 89 | 109 | 90 | 462 | (2,207 | ) | |||||||||||||||||||
Gain on extinguishment of debt | — | — | — | — | — | — | (5,136 | ) | ||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 5,591 | (185 | ) | 1,610 | 166 | 245 | 7,182 | 5,072 | ||||||||||||||||||||
NOI | $ | 29,484 | $ | 31,962 | $ | 33,475 | $ | 35,065 | $ | 36,523 | $ | 129,986 | $ | 149,640 | ||||||||||||||
Net amortization of above- and below-market lease assets and liabilities, and other non-cash adjustments to rental revenue | (995 | ) | (706 | ) | (704 | ) | (554 | ) | 150 | (2,959 | ) | (512 | ) | |||||||||||||||
Straight line rent | (2,319 | ) | 109 | 238 | 117 | 522 | (1,855 | ) | 1,263 | |||||||||||||||||||
NOI—cash basis | $ | 26,170 | $ | 31,365 | $ | 33,009 | $ | 34,628 | $ | 37,195 | $ | 125,172 | $ | 150,391 |
Three Months Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Recurring capital expenditures: | ||||||||||||||||||||||||||||
Land and building improvements | $ | 4,046 | $ | 4,003 | $ | 3,276 | $ | 1,108 | $ | 5,740 | $ | 12,433 | $ | 10,712 | ||||||||||||||
Tenant improvements | 3,853 | 4,610 | 1,438 | 1,046 | 1,267 | 10,947 | 8,506 | |||||||||||||||||||||
Leasing costs (1) | 2,250 | 2,249 | 1,238 | 647 | 1,032 | 6,384 | 7,478 | |||||||||||||||||||||
Total recurring capital expenditures | $ | 10,149 | $ | 10,862 | $ | 5,952 | $ | 2,801 | $ | 8,039 | $ | 29,764 | $ | 26,696 | ||||||||||||||
Non-recurring capital expenditures: | ||||||||||||||||||||||||||||
Land and building improvements | $ | 274 | $ | 384 | $ | 266 | $ | 292 | $ | 782 | $ | 1,216 | $ | 2,013 | ||||||||||||||
Tenant improvements | 934 | 646 | 64 | 93 | 165 | 1,737 | 1,061 | |||||||||||||||||||||
Leasing costs | 203 | 74 | 256 | 84 | 131 | 617 | 434 | |||||||||||||||||||||
Total non-recurring capital expenditures | $ | 1,411 | $ | 1,104 | $ | 586 | $ | 469 | $ | 1,078 | $ | 3,570 | $ | 3,508 |
(1) | Recurring leasing costs include lease incentives. Unlike other capital expenditures, we record lease incentives as other assets in our balance sheet and we classify payments for lease incentives as cash used in operating activities in our statement of cash flows. |
FINANCE & CAPITAL |
(in thousands) | As of December 31, 2017 | ||||||||
Unsecured line of credit | $ | 142,000 | |||||||
Unsecured term loans | 475,000 | ||||||||
Mortgage notes | 401,894 | ||||||||
Total Financing (1) | $ | 1,018,894 |
(in thousands, except per share data and percentages) | Shares / Units | Percentage of Aggregate Shares and Units Outstanding | NAV Per Share / Unit | Value | ||||||||||
Class T Common Stock | 2,062 | 1.4 | % | $ | 7.41 | $ | 15,276 | |||||||
Class S Common Stock | 64 | — | 7.41 | 474 | ||||||||||
Class D Common Stock | 2,510 | 1.7 | 7.41 | 18,589 | ||||||||||
Class I Common Stock (2) | 34,069 | 23.7 | 7.41 | 252,368 | ||||||||||
Class E Common Stock | 93,695 | 65.3 | 7.41 | 694,044 | ||||||||||
Class E OP Units | 11,292 | 7.9 | 7.41 | 83,647 | ||||||||||
Total/Weighted Average | 143,692 | 100.0 | % | $ | 7.41 | $ | 1,064,398 | |||||||
TOTAL CAPITALIZATION | $ | 2,083,292 |
(1) | For a reconciliation of the total outstanding principal balance under our total borrowings to total borrowings on a GAAP basis see page 15. |
(2) | Amounts reported do not include approximately 66,000 restricted stock units granted to the Advisor that remain unvested as of December 31, 2017. |
FINANCE & CAPITAL (continued) |
($ in thousands) | Weighted-Average Effective Interest Rate | Maturity Date | Outstanding Principal Balance | Fair Value of Real Properties Securing Borrowings | ||||||||
Line of credit (1) | 3.27% | January 2019 | $ | 142,000 | N/A | |||||||
Term loan (2) | 3.25% | January 2018 | 275,000 | N/A | ||||||||
Term loan (3) | 3.94% | February 2022 | 200,000 | N/A | ||||||||
Total unsecured borrowings | 3.48% | 617,000 | N/A | |||||||||
Fixed-rate mortgage notes (4) | 3.89% | September 2021 - December 2029 | 123,794 | $ | 238,450 | |||||||
Floating-rate mortgage notes (5) | 3.88% | January 2020 - August 2023 | 278,100 | 542,850 | ||||||||
Total mortgage notes | 3.88% | $ | 401,894 | $ | 781,300 | |||||||
Total principal amount / weighted-average (6) | 3.64% | $ | 1,018,894 | |||||||||
Less unamortized debt issuance costs | $ | (7,322 | ) | |||||||||
Add mark-to-market adjustment on assumed debt | 536 | |||||||||||
Total debt, net | $ | 1,012,108 |
(1) | The effective interest rate is calculated based on the London Interbank Offered Rate ("LIBOR"), plus a margin ranging from 1.40% to 2.30%, depending on our consolidated leverage ratio. There were no interest rate swap agreements relating to this line of credit as of December 31, 2017. As of December 31, 2017, the unused and available portions under the line of credit were approximately $258.0 million and $145.8 million, respectively. The line of credit is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties. |
(2) | The effective interest rate is calculated based on LIBOR, plus a margin ranging from 1.35% to 2.20%, depending on our consolidated leverage ratio. The weighted-average interest rate is the all-in interest rate, including the effects of interest swap agreements relating to approximately $150.0 million in borrowings under this term loan. In January 2018, we exercised a one-year extension option on this term loan. This term loan is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties. |
(3) | The effective interest rate is calculated based on LIBOR, plus a margin ranging from 1.65% to 2.55%, depending on our consolidated leverage ratio. The weighted-average interest rate is the all-in interest rate and is entirely fixed through interest swap agreements. This term loan is available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties. |
(4) | Amount as of December 31, 2017 includes a $33.0 million floating-rate mortgage note that was subject to an interest rate spread of 1.60% over one-month LIBOR, which we have effectively fixed using an interest rate swap at 3.051% for the term of the borrowing. |
(5) | The effective interest rate is calculated based on LIBOR plus a margin. As of December 31, 2017, our floating rate mortgage notes were subject to a weighted-average interest rate spread of 2.31%. |
(6) | The weighted-average remaining term of our borrowings was approximately 2.6 years as of December 31, 2017. |
FINANCE & CAPITAL (continued) |
Portfolio-Level Covenants: | Covenant | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||
Leverage | < 60% | 52.5 | % | 53.9 | % | 52.3 | % | 50.8 | % | 47.5 | % | ||||||
Fixed Charge Coverage | > 1.50 | 2.3 | 2.4 | 3.0 | 3.3 | 3.3 | |||||||||||
Secured Indebtedness | < 55% | 20.7 | % | 22.4 | % | 18.1 | % | 16.7 | % | 15.5 | % | ||||||
Unencumbered Pool Covenants: | |||||||||||||||||
Leverage | < 60% | 48.5 | % | 52.7 | % | 51.2 | % | 50.7 | % | 45.5 | % | ||||||
Unsecured Interest Coverage | >2.0 | 3.1 | 3.2 | 4.2 | 5.2 | 6.8 |
FINANCE & CAPITAL (continued) |
($ in thousands) | Principal Balance | Secured / Unsecured | Maturity Date | Extension Options | % of Total Borrowings | Fixed or Floating Interest Rate | Current Interest Rate | |||||||||||
Bank of America Term Loan (1) | $ | 150,000 | Unsecured | 1/31/2018 | (2) | 2 - 1 Year | 14.7 | % | Fixed | 3.31 | % | |||||||
Bank of America Term Loan | 125,000 | Unsecured | 1/31/2018 | (2) | 2 - 1 Year | 12.3 | Floating | 3.17 | ||||||||||
Line of Credit | 142,000 | Unsecured | 1/31/2019 | 1 - 1 Year | 13.8 | Floating | 3.27 | |||||||||||
3 Second Street (3) | 127,000 | Secured | 1/10/2020 | 2 - 1 Year | 12.5 | Floating | 3.82 | |||||||||||
655 Montgomery (4) | 98,600 | Secured | 9/7/2020 | 2 - 1 Year | 9.7 | Floating | 4.32 | |||||||||||
Shenandoah | 10,197 | Secured | 9/1/2021 | None | 1.0 | Fixed | 4.84 | |||||||||||
Wells Fargo Term Loan (5) | 200,000 | Unsecured | 2/27/2022 | None | 19.6 | Fixed | 3.94 | |||||||||||
Norwell | 3,756 | Secured | 10/1/2022 | None | 0.4 | Fixed | 6.76 | |||||||||||
Preston Sherry Plaza (6) | 33,000 | Secured | 3/1/2023 | None | 3.2 | Fixed | 3.05 | |||||||||||
1300 Connecticut (7) | 52,500 | Secured | 8/5/2023 | None | 5.2 | Floating | 3.22 | |||||||||||
270 Center | 70,000 | Secured | 12/1/2025 | None | 6.9 | Fixed | 3.80 | |||||||||||
New Bedford | 6,841 | Secured | 12/1/2029 | None | 0.7 | Fixed | 5.91 | |||||||||||
Total borrowings | $ | 1,018,894 | 100.0 | % | 3.64 | % | ||||||||||||
Add: mark-to-market adjustment on assumed debt | 536 | |||||||||||||||||
Less: net debt issuance costs | (7,322 | ) | ||||||||||||||||
Total Borrowings (GAAP basis) | $ | 1,012,108 |
(1) | Borrowings under this term loan are effectively fixed by the use of interest rate swap agreements as of December 31, 2017. The stated interest rates disclosed above include the impact of these swaps. |
(2) | In January 2018, we exercised an option to extend this term loan for another year until January 31, 2019. |
(3) | The 3 Second Street term loan was subject to an interest rate spread of 2.25% over one-month LIBOR as of December 31, 2017. However, in conjunction with this borrowing, we entered into an interest rate protection agreement with a LIBOR strike rate of 3.00%. |
(4) | The 655 Montgomery term loan was subject to an interest rate spread of 2.75% over one-month LIBOR as of December 31, 2017. However, in conjunction with this borrowing, we entered into an interest rate protection agreement with a LIBOR strike rate of 3.00%. |
(5) | Borrowings under this term loan are effectively fixed by the use of fixed-for-floating rate swap instruments as of December 31, 2017. |
(6) | The Preston Sherry Plaza term loan was subject to an interest rate spread of 1.60% over one-month LIBOR. However, we have effectively fixed the interest rate of the borrowing using an interest rate swap at 3.051% for the term of the borrowing as of September 30, 2017. |
(7) | As of December 31, 2017, the 1300 Connecticut term loan was subject to an interest rate spread of 1.65% over one-month LIBOR. However, we entered into an interest rate swap which will effectively fix the interest rate of the borrowing at 2.852% from July 1, 2018 to July 1, 2021. |
REAL PROPERTIES |
($ and square feet in thousands) | Number of Properties | Investment in Real Estate Properties | % of Gross Investment Amount | Rentable Square Feet | % of Total Rentable Square Feet | % Leased (1) | Secured Indebtedness (2) | |||||||||||||||
Office Properties: | ||||||||||||||||||||||
Metro New York | 1 | $ | 232,848 | 11.6 | % | 594 | 7.8 | % | 66.9 | % | $ | 127,000 | ||||||||||
Austin | 3 | 157,049 | 7.7 | 585 | 7.7 | 93.6 | — | |||||||||||||||
East Bay | 1 | 152,963 | 7.5 | 417 | 5.5 | 17.5 | — | |||||||||||||||
San Francisco | 1 | 125,171 | 6.2 | 263 | 3.5 | 81.9 | 98,600 | |||||||||||||||
Denver | 1 | 83,867 | 4.1 | 262 | 3.5 | 78.9 | — | |||||||||||||||
South Florida | 2 | 81,769 | 4.0 | 363 | 4.8 | 80.5 | — | |||||||||||||||
Washington, DC | 1 | 71,292 | 3.5 | 126 | 1.7 | 99.1 | 52,500 | |||||||||||||||
Princeton | 1 | 51,375 | 2.5 | 167 | 2.2 | 100.0 | — | |||||||||||||||
Philadelphia | 1 | 47,311 | 2.3 | 174 | 2.3 | 90.9 | — | |||||||||||||||
Dallas | 1 | 38,872 | 1.9 | 155 | 2.1 | 93.4 | 33,000 | |||||||||||||||
Minneapolis/St Paul | 1 | 29,528 | 1.5 | 107 | 1.4 | 100.0 | — | |||||||||||||||
Fayetteville | 1 | 12,468 | 0.6 | 61 | 0.8 | 100.0 | — | |||||||||||||||
Total/Weighted Average Office: 12 markets with average annual rent of $30.38 per sq. ft. | 15 | 1,084,513 | 53.4 | 3,274 | 43.3 | 76.2 | 311,100 | |||||||||||||||
Retail Properties: | ||||||||||||||||||||||
Greater Boston | 22 | 510,458 | 25.2 | 2,074 | 27.4 | 94.2 | 10,597 | |||||||||||||||
South Florida | 2 | 106,769 | 5.3 | 206 | 2.7 | 94.7 | 10,197 | |||||||||||||||
Washington, DC | 1 | 62,867 | 3.1 | 233 | 3.1 | 100.0 | 70,000 | |||||||||||||||
Metro New York | 1 | 59,188 | 2.9 | 224 | 3.0 | 93.9 | — | |||||||||||||||
Raleigh | 1 | 45,839 | 2.3 | 143 | 1.9 | 100.0 | — | |||||||||||||||
Tulsa | 1 | 34,068 | 1.7 | 101 | 1.3 | 100.0 | — | |||||||||||||||
San Antonio | 1 | 32,572 | 1.6 | 161 | 2.1 | 88.7 | — | |||||||||||||||
Jacksonville | 1 | 20,237 | 1.0 | 73 | 1.0 | 48.0 | — | |||||||||||||||
Total/Weighted Average Retail: eight markets with average annual rent of $17.78 per sq. ft. | 30 | 871,998 | 43.1 | 3,215 | 42.5 | 93.8 | 90,794 | |||||||||||||||
Industrial Properties: | ||||||||||||||||||||||
Central Kentucky | 1 | 30,840 | 1.5 | 727 | 9.6 | 100.0 | — | |||||||||||||||
Las Vegas | 1 | 24,656 | 1.2 | 248 | 3.3 | 100.0 | — | |||||||||||||||
East Bay | 1 | 16,899 | 0.8 | 96 | 1.3 | 100.0 | — | |||||||||||||||
Total/Weighted Average Industrial: three markets with average annual rent of $4.48 per sq. ft. | 3 | 72,395 | 3.5 | 1,071 | 14.2 | 100.0 | — | |||||||||||||||
Total real estate portfolio | 48 | $ | 2,028,906 | 100.0 | % | 7,560 | 100.0 | % | 87.0 | % | $ | 401,894 |
(1) | Based on executed leases as of December 31, 2017. If weighted by the fair value of each segment, our portfolio was 84.2% leased as of December 31, 2017. |
(2) | Secured indebtedness represents the principal balance outstanding and does not include our mark-to-market adjustment on debt or net debt issuance costs. |
LEASING ACTIVITY |
LEASING ACTIVITY (continued) |
Total | Office | Retail | Industrial | |||||||||||||||||||||||||||||||||||||
($ and square feet in thousands) | Number of Leases Expiring | Annualized Base Rent | % of Total Annualized Base Rent | Square Feet | Number of Leases Expiring | Annualized Base Rent | Square Feet | Number of Leases Expiring | Annualized Base Rent | Square Feet | Number of Leases Expiring | Annualized Base Rent | Square Feet | |||||||||||||||||||||||||||
2018 (1) | 82 | $ | 6,365 | 4.7 | % | 267 | 44 | $ | 4,173 | 163 | 38 | $ | 2,192 | 104 | — | $ | — | — | ||||||||||||||||||||||
2019 | 95 | 22,557 | 16.8 | 923 | 48 | 14,221 | 447 | 47 | 8,336 | 476 | — | — | — | |||||||||||||||||||||||||||
2020 | 112 | 20,562 | 15.3 | 917 | 50 | 9,041 | 339 | 61 | 11,426 | 565 | 1 | 95 | 13 | |||||||||||||||||||||||||||
2021 | 62 | 15,251 | 11.4 | 1,201 | 29 | 7,231 | 206 | 31 | 4,938 | 232 | 2 | 3,082 | 763 | |||||||||||||||||||||||||||
2022 | 65 | 14,205 | 10.6 | 734 | 24 | 6,610 | 223 | 41 | 7,595 | 511 | — | — | — | |||||||||||||||||||||||||||
2023 | 53 | 20,937 | 15.6 | 832 | 21 | 15,081 | 497 | 32 | 5,856 | 335 | — | — | — | |||||||||||||||||||||||||||
2024 | 24 | 3,839 | 2.9 | 187 | 9 | 2,567 | 113 | 15 | 1,272 | 74 | — | — | — | |||||||||||||||||||||||||||
2025 | 22 | 4,529 | 3.4 | 183 | 10 | 2,809 | 98 | 11 | 1,557 | 66 | 1 | 163 | 19 | |||||||||||||||||||||||||||
2026 | 17 | 3,320 | 2.5 | 207 | 6 | 1,193 | 31 | 10 | 1,921 | 148 | 1 | 206 | 28 | |||||||||||||||||||||||||||
2027 | 18 | 6,463 | 4.8 | 528 | 3 | 1,277 | 70 | 14 | 3,935 | 210 | 1 | 1,251 | 248 | |||||||||||||||||||||||||||
Thereafter | 28 | 16,229 | 12.0 | 595 | 11 | 11,543 | 298 | 17 | 4,686 | 297 | — | — | — | |||||||||||||||||||||||||||
Total | 578 | $ | 134,257 | 100.0 | % | 6,574 | 255 | $ | 75,746 | 2,485 | 317 | $ | 53,714 | 3,018 | 6 | $ | 4,797 | 1,071 |
(1) | Includes three leases with combined annualized base rent of approximately $34,000 that are on a month-to-month basis. |
LEASING ACTIVITY (continued) |
($ and square feet in thousands) | Number of Locations (1) | Industry Sector (2) | Annualized Base Rent (3) | % of Total Annualized Base Rent (3) | Square Feet | % of Total Leased Square Feet | |||||||||||
Stop & Shop | 13 | Food and Beverage Stores | $ | 13,579 | 10.1 | % | 803 | 12.2 | % | ||||||||
Novo Nordisk | 1 | Chemical Manufacturing | 4,721 | 3.5 | 167 | 2.5 | |||||||||||
Mizuho Bank Ltd. | 1 | Credit Intermediation and Related Activities | 4,497 | 3.3 | 116 | 1.8 | |||||||||||
Seton Health Care | 1 | Hospitals | 4,339 | 3.2 | 156 | 2.4 | |||||||||||
Amazon.com | 2 | Non-Store Retailers | 3,618 | 2.7 | 975 | 14.8 | |||||||||||
I.A.M. National Pension Fund | 1 | Funds, Trusts and Other Financial Vehicles | 3,207 | 2.4 | 63 | 1.0 | |||||||||||
Shaw's Supermarket | 3 | Food and Beverage Stores | 3,037 | 2.3 | 181 | 2.8 | |||||||||||
TJX Companies | 6 | Clothing and Clothing Accessories Stores | 2,832 | 2.1 | 287 | 4.4 | |||||||||||
Citco Fund Services | 1 | Funds, Trusts and Other Financial Vehicles | 2,812 | 2.1 | 70 | 1.1 | |||||||||||
Trinet Group, Inc. | 1 | Professional, Scientific and Technical Services | 2,713 | 2.0 | 73 | 1.1 | |||||||||||
30 | $ | 45,355 | 33.7 | % | 2,891 | 44.1 | % |
(1) | Reflects the number of properties for which the tenant has at least one lease in-place. |
(2) | Industry sector based upon the North American Industry Classification System. |
(3) | Annualized base rent is calculated as monthly base rent including the impact of any contractual tenant concessions (cash basis) per the terms of the lease as of December 31, 2017, multiplied by 12. |
LEASING ACTIVITY (continued) |
Quarter | Number of Leases Signed | Gross Leasable Area ("GLA") Signed | Weighted Average Rent Per Sq. Ft. | Weighted Average Growth / Straight Line Rent | Weighted Average Lease Term (mos) | Tenant Improvements & Incentives Per Sq. Ft. | Average Free Rent (mos) | |||||||||||||
Office Comparable (1) | ||||||||||||||||||||
Q4 2017 | 13 | 55,434 | $ | 39.09 | 39.5 | % | 56 | $ | 19.20 | 1.9 | ||||||||||
Q3 2017 | 14 | 129,151 | 23.02 | 22.8 | % | 103 | 28.09 | 4.1 | ||||||||||||
Q2 2017 (2) | 15 | 95,858 | 47.49 | 110.5 | % | 136 | 111.25 | 4.7 | ||||||||||||
Q1 2017 | 8 | 24,088 | 23.53 | 40.8 | % | 52 | 23.84 | 3.3 | ||||||||||||
Total - twelve months | 50 | 304,531 | $ | 37.09 | 66.0 | % | 108 | $ | 68.55 | 3.9 | ||||||||||
Retail Comparable (1) | ||||||||||||||||||||
Q4 2017 | 10 | 47,571 | $ | 22.97 | 24.2 | % | 76 | $ | 0.37 | 0.6 | ||||||||||
Q3 2017 | 17 | 112,791 | 30.81 | 19.3 | % | 72 | 9.32 | — | ||||||||||||
Q2 2017 | 15 | 72,487 | 25.91 | 12.7 | % | 133 | 29.96 | 0.1 | ||||||||||||
Q1 2017 | 16 | 92,674 | 19.13 | 13.5 | % | 96 | 0.85 | — | ||||||||||||
Total - twelve months | 58 | 325,523 | $ | 25.34 | 16.7 | % | 100 | $ | 13.10 | 0.1 | ||||||||||
Industrial Comparable (1) | ||||||||||||||||||||
Q4 2017 | — | — | $ | — | — | % | — | $ | — | — | ||||||||||
Q3 2017 | — | — | — | — | % | — | — | — | ||||||||||||
Q2 2017 | — | — | — | — | % | — | — | — | ||||||||||||
Q1 2017 | 2 | 156,896 | 3.06 | 13.6 | % | 30 | 0.35 | 1.7 | ||||||||||||
Total - twelve months | 2 | 156,896 | $ | 3.06 | 13.6 | % | 30 | $ | 0.35 | 1.7 | ||||||||||
Total Comparable Leasing (1) | ||||||||||||||||||||
Q4 2017 | 23 | 103,005 | $ | 33.88 | 28.7 | % | 60 | $ | 15.01 | 1.6 | ||||||||||
Q3 2017 | 31 | 241,942 | 26.64 | 18.5 | % | 91 | 20.90 | 2.5 | ||||||||||||
Q2 2017 | 30 | 168,345 | 41.30 | 54.8 | % | 135 | 89.17 | 3.4 | ||||||||||||
Q1 2017 | 26 | 273,658 | 10.30 | 16.9 | % | 54 | 2.59 | 1.3 | ||||||||||||
Total - twelve months | 110 | 786,950 | $ | 30.00 | 32.5 | % | 101 | $ | 48.01 | 2.6 | ||||||||||
Total Leasing | ||||||||||||||||||||
Q4 2017 | 37 | 218,358 | $ | 28.67 | 68 | $ | 16.78 | 2.2 | ||||||||||||
Q3 2017 | 53 | 442,748 | 28.67 | 102 | 53.54 | 3.7 | ||||||||||||||
Q2 2017 | 41 | 216,786 | 40.23 | 133 | 85.14 | 3.2 | ||||||||||||||
Q1 2017 | 38 | 358,544 | 10.15 | 54 | 54.82 | 1.4 | ||||||||||||||
Total - twelve months | 169 | 1,236,436 | $ | 29.11 | 102 | $ | 59.16 | 3.0 |
(1) | Comparable leases comprise leases for which prior leases were in place for the same suite within 12 months of executing a new lease. Comparable leases must have terms of at least six months and the square footage of the suite occupied by the new tenant cannot deviate by more than 50% from the size of the old lease’s suite. |
(2) | In Q2 2017, we signed a 53,000 square foot lease with WeWork LLC ("WeWork") at an office property in San Francisco, CA. Excluding WeWork, our weighted average growth for comparable office leases for the three months ended June 30, 2017 and for the trailing twelve months ended December 31, 2017 was 29.5% and 30.3%, respectively. Excluding WeWork, our weighted average growth for total comparable leases for the three months ended June 30, 2017 and for the year ended December 31, 2017 was 14.6% and 18.6%, respectively. |
INVESTMENT ACTIVITY |
Square Feet | ||||||||||||||
(square feet in thousands) | Number of Properties | Total | Office | Retail | Industrial | |||||||||
Properties owned as of | ||||||||||||||
December 31, 2015 | 60 | 10,133 | 4,461 | 3,763 | 1,909 | |||||||||
2016 Acquisitions | 1 | 82 | — | 82 | — | |||||||||
2016 Dispositions | (7) | (1,236 | ) | (1,058 | ) | (52 | ) | (126 | ) | |||||
Building remeasurement and other (1) | 1 | (8 | ) | (3 | ) | (4 | ) | (1 | ) | |||||
December 31, 2016 | 55 | 8,971 | 3,400 | 3,789 | 1,782 | |||||||||
2017 Acquisitions | 2 | 344 | — | — | 344 | |||||||||
2017 Dispositions | (10) | (1,797 | ) | (155 | ) | (587 | ) | (1,055 | ) | |||||
Building remeasurement and other (1) | 1 | 42 | 29 | 13 | — | |||||||||
December 31, 2017 | 48 | 7,560 | 3,274 | 3,215 | 1,071 |
(1) | Building remeasurements reflect changes in gross leasable area due to renovations or expansions of existing properties. In the fourth quarter of 2016, we sold one building of a multi-building grocery-anchored retail property, and continue to own the remaining buildings. In the third quarter of 2017, we sold one building from a three-building industrial property. The remaining two buildings were disposed of during the fourth quarter of 2017. Additionally, in the fourth quarter of 2017, we sold a retail outparcel that was part of a multi-building office property, and continue to own the remaining buildings. |
($ and square feet in thousands) | Segment | Market | Acquisition Date | Number of Properties | Contract Purchase Price | Square Feet | |||||||||
2017 Acquisitions: | |||||||||||||||
Vasco Road | Industrial | East Bay | 7/21/2017 | 1 | $ | 16,248 | 96 | ||||||||
Northgate | Industrial | Las Vegas | 7/26/2017 | 1 | 24,500 | 248 | |||||||||
Total 2017 Acquisitions | 2 | $ | 40,748 | 344 | |||||||||||
2016 Acquisitions: | |||||||||||||||
Suniland | Retail | South Florida | 5/27/2016 | 1 | $ | 66,500 | 82 |
INVESTMENT ACTIVITY (continued) |
($ and square feet in thousands) | Segment | Market | Disposition Date | Number of Properties | Contract Sales Price | Square Feet | |||||||||
2017 Dispositions: | |||||||||||||||
Hanover | Retail | Greater Boston | 5/31/2017 | 1 | $ | 4,500 | 51 | ||||||||
Riverport Industrial Portfolio (1) | Industrial | Louisville | 6/9/2017 | 3 | 26,800 | 609 | |||||||||
Shiloh Road - Building 620 (2) | Industrial | Dallas | 7/21/2017 | — | 7,661 | 128 | |||||||||
Jay Street | Office | Silicon Valley | 10/17/2017 | 1 | 44,900 | 143 | |||||||||
Centerton Square | Retail | Philadelphia | 10/25/2017 | 1 | 129,630 | 426 | |||||||||
Cohasset | Retail | Greater Boston | 12/7/2017 | 1 | 13,050 | 50 | |||||||||
Harwich | Retail | Greater Boston | 12/15/2017 | 1 | 17,000 | 59 | |||||||||
Venture Corporate Center Outparcel (3) | Retail | South Florida | 12/15/2017 | 1 | 5,972 | 13 | |||||||||
Shiloh Road - Buildings 600 and 640 (2) | Industrial | Dallas | 12/18/2017 | 1 | 19,575 | 318 | |||||||||
Total 2017 Dispositions | 10 | $ | 269,088 | 1,797 | |||||||||||
2016 Dispositions: | |||||||||||||||
Colshire Drive | Office | Washington, DC | 2/18/2016 | 1 | $ | 158,400 | 574 | ||||||||
40 Boulevard | Office | Chicago | 3/1/2016 | 1 | 9,850 | 107 | |||||||||
Washington Commons | Office | Chicago | 3/1/2016 | 1 | 18,000 | 199 | |||||||||
Rockland 360-372 Market | Retail | Greater Boston | 8/5/2016 | 1 | 3,625 | 39 | |||||||||
6900 Riverport | Industrial | Louisville | 9/2/2016 | 1 | 5,400 | 126 | |||||||||
Sunset Hills | Office | Washington, DC | 9/30/2016 | 1 | 18,600 | 178 | |||||||||
Holbrook CVS Parcel (4) | Retail | Greater Boston | 11/18/2016 | 1 | 6,200 | 13 | |||||||||
Total 2016 Dispositions | 7 | $ | 220,075 | 1,236 |
(1) | Riverport Industrial Portfolio included three properties. |
(2) | Shiloh Road - Building 620 was one building of a three-building industrial property ("Shiloh Road"). The remaining two buildings of the Shiloh Road industrial property were disposed of during the fourth quarter of 2017. |
(3) | The retail outparcel was part of a multi-building office property and we continue to own the remaining buildings. |
(4) | We sold CVS Holbrook, one building of a multi-building grocery-anchored retail property, and continue to own the remaining buildings. |
DEFINITIONS |
DEFINITIONS (continued) |
• | First Generation Leasing Costs: We classify capital expenditures incurred to lease spaces for which we have either (i) never had a tenant or (ii) we expected a vacancy of the leasable space within two years of acquisition as non-recurring capital expenditures. |
• | Value-Add Acquisitions: We define a Value-Add Acquisition as a property that we acquire with one or more of the following characteristics: (i) existing vacancy equal to or in excess of 20%, (ii) short-term lease roll-over, typically during the first two years of ownership, that results in vacancy in excess of 20% when combined with the existing vacancy at the time of acquisition or (iii) significant capital improvement requirements in excess of 20% of the purchase price within the first two years of ownership. We classify any capital expenditures in Value-Add Acquisitions as non-recurring until the property reaches the earlier of (i) stabilization, which we define as 90% leased or (ii) five years after the date we acquire the property. |
• | Other Acquisitions: For property acquisitions that do not meet the criteria to qualify as Value-Add Acquisitions, we classify all anticipated capital expenditures within the first year of ownership as non-recurring. |
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