Maryland | 20-8429087 | |
(State of incorporation) | (I.R.S. Employer Identification No.) | |
50 Rockefeller Plaza | ||
New York, New York | 10020 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
(Do not check if a smaller reporting company) |
Page No. | ||
PART I − FINANCIAL INFORMATION | ||
Item 1. Financial Statements (Unaudited) | ||
Item 4. Controls and Procedures | ||
PART II − OTHER INFORMATION | ||
Item 6. Exhibits | ||
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Investments in real estate: | |||||||
Real estate, at cost | $ | 2,701,186 | $ | 2,658,877 | |||
Operating real estate, at cost | 258,873 | 275,521 | |||||
Accumulated depreciation | (288,813 | ) | (256,175 | ) | |||
Net investments in properties | 2,671,246 | 2,678,223 | |||||
Real estate under construction | 1,578 | 1,068 | |||||
Assets held for sale | 14,850 | — | |||||
Net investments in direct financing leases | 510,755 | 495,564 | |||||
Net investments in real estate | 3,198,429 | 3,174,855 | |||||
Equity investments in real estate | 477,362 | 514,147 | |||||
Cash and cash equivalents | 310,738 | 152,889 | |||||
In-place lease and tenant relationship intangible assets, net | 433,849 | 445,223 | |||||
Other intangible assets, net | 77,004 | 80,049 | |||||
Other assets, net | 265,505 | 246,027 | |||||
Total assets | $ | 4,762,887 | $ | 4,613,190 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Non-recourse debt, net | $ | 2,017,477 | $ | 1,881,774 | |||
Senior Credit Facility, net | 49,719 | 112,834 | |||||
Accounts payable, accrued expenses and other liabilities | 129,771 | 133,948 | |||||
Deferred income taxes | 30,022 | 24,929 | |||||
Below-market rent and other intangible liabilities, net | 92,385 | 96,701 | |||||
Due to affiliates | 9,389 | 13,634 | |||||
Distributions payable | 55,697 | 54,775 | |||||
Total liabilities | 2,384,460 | 2,318,595 | |||||
Commitments and contingencies (Note 11) | |||||||
Equity: | |||||||
CPA®:17 – Global stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 50,000,000 shares authorized; none issued | — | — | |||||
Common stock, $0.001 par value; 900,000,000 shares authorized; and 342,748,756 and 337,065,419 shares, respectively, issued and outstanding | 343 | 337 | |||||
Additional paid-in capital | 3,096,573 | 3,037,727 | |||||
Distributions in excess of accumulated earnings | (681,631 | ) | (700,912 | ) | |||
Accumulated other comprehensive loss | (134,886 | ) | (139,805 | ) | |||
Total CPA®:17 – Global stockholders’ equity | 2,280,399 | 2,197,347 | |||||
Noncontrolling interests | 98,028 | 97,248 | |||||
Total equity | 2,378,427 | 2,294,595 | |||||
Total liabilities and equity | $ | 4,762,887 | $ | 4,613,190 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
Lease revenues: | |||||||||||||||
Rental income | $ | 75,368 | $ | 69,075 | $ | 218,451 | $ | 198,473 | |||||||
Interest income from direct financing leases | 14,614 | 14,386 | 43,519 | 41,470 | |||||||||||
Total lease revenues | 89,982 | 83,461 | 261,970 | 239,943 | |||||||||||
Other real estate income | 10,792 | 12,686 | 37,281 | 36,755 | |||||||||||
Other operating income | 7,604 | 7,839 | 22,175 | 29,404 | |||||||||||
Other interest income | 1,698 | 4,216 | 5,061 | 10,518 | |||||||||||
110,076 | 108,202 | 326,487 | 316,620 | ||||||||||||
Operating Expenses | |||||||||||||||
Depreciation and amortization | 31,244 | 26,844 | 87,559 | 78,675 | |||||||||||
Impairment charges | 29,183 | — | 29,183 | 1,023 | |||||||||||
Property expenses | 17,591 | 17,704 | 53,967 | 54,042 | |||||||||||
Other real estate expenses | 4,083 | 4,808 | 13,966 | 14,083 | |||||||||||
General and administrative | 3,895 | 4,897 | 12,223 | 13,690 | |||||||||||
Acquisition expenses | 1,446 | — | 6,786 | 643 | |||||||||||
87,442 | 54,253 | 203,684 | 162,156 | ||||||||||||
Other Income and Expenses | |||||||||||||||
Interest expense | (25,048 | ) | (24,104 | ) | (75,027 | ) | (69,346 | ) | |||||||
Loss on extinguishment of debt | (15,990 | ) | (5 | ) | (23,580 | ) | (275 | ) | |||||||
Equity in earnings (losses) of equity method investments in real estate | 2,780 | (1,078 | ) | 6,532 | 6,625 | ||||||||||
Other income and (expenses) | 2,715 | 2,113 | 7,081 | 3,192 | |||||||||||
Gain on change in control of interests | — | — | 49,922 | — | |||||||||||
(35,543 | ) | (23,074 | ) | (35,072 | ) | (59,804 | ) | ||||||||
(Loss) income before income taxes and gain on sale of real estate | (12,909 | ) | 30,875 | 87,731 | 94,660 | ||||||||||
Provision for income taxes | (2,333 | ) | (1,676 | ) | (6,530 | ) | (4,441 | ) | |||||||
(Loss) income before gain on sale of real estate | (15,242 | ) | 29,199 | 81,201 | 90,219 | ||||||||||
Gain on sale of real estate, net of tax | 82,287 | — | 132,702 | 2,197 | |||||||||||
Net Income | 67,045 | 29,199 | 213,903 | 92,416 | |||||||||||
Net income attributable to noncontrolling interests (inclusive of Available Cash Distributions to a related party of $5,276, $5,837, $17,803, and $17,690, respectively) | (8,827 | ) | (9,147 | ) | (28,404 | ) | (29,345 | ) | |||||||
Net Income Attributable to CPA®:17 – Global | $ | 58,218 | $ | 20,052 | $ | 185,499 | $ | 63,071 | |||||||
Basic and Diluted Earnings Per Share | $ | 0.17 | $ | 0.06 | $ | 0.54 | $ | 0.19 | |||||||
Basic and Diluted Weighted-Average Shares Outstanding | 343,209,362 | 335,668,313 | 341,325,683 | 333,523,528 | |||||||||||
Distributions Declared Per Share | $ | 0.1625 | $ | 0.1625 | $ | 0.4875 | $ | 0.4875 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Income | $ | 67,045 | $ | 29,199 | $ | 213,903 | $ | 92,416 | |||||||
Other Comprehensive Income (Loss) | |||||||||||||||
Foreign currency translation adjustments | 3,707 | (1,100 | ) | 15,442 | (60,990 | ) | |||||||||
Change in net unrealized (loss) gain on derivative instruments | (2,392 | ) | (3,142 | ) | (9,997 | ) | 15,665 | ||||||||
Change in unrealized gain on marketable securities | 8 | 7 | 22 | 21 | |||||||||||
1,323 | (4,235 | ) | 5,467 | (45,304 | ) | ||||||||||
Comprehensive Income | 68,368 | 24,964 | 219,370 | 47,112 | |||||||||||
Amounts Attributable to Noncontrolling Interests | |||||||||||||||
Net income | (8,827 | ) | (9,147 | ) | (28,404 | ) | (29,345 | ) | |||||||
Foreign currency translation adjustments | (108 | ) | (103 | ) | (548 | ) | 631 | ||||||||
Comprehensive income attributable to noncontrolling interests | (8,935 | ) | (9,250 | ) | (28,952 | ) | (28,714 | ) | |||||||
Comprehensive Income Attributable to CPA®:17 – Global | $ | 59,433 | $ | 15,714 | $ | 190,418 | $ | 18,398 |
Total Outstanding Shares | Common Stock | Additional Paid-In Capital | Distributions in Excess of Accumulated Earnings | Accumulated Other Comprehensive Loss | Total CPA®:17 – Global Stockholders | Noncontrolling Interests | Total | |||||||||||||||||||||||
Balance at January 1, 2016 | 337,065,419 | $ | 337 | $ | 3,037,727 | $ | (700,912 | ) | $ | (139,805 | ) | $ | 2,197,347 | $ | 97,248 | $ | 2,294,595 | |||||||||||||
Shares issued, net of offering costs | 7,725,537 | 8 | 77,710 | 77,718 | 77,718 | |||||||||||||||||||||||||
Shares issued to directors | 9,766 | — | 100 | 100 | 100 | |||||||||||||||||||||||||
Shares issued to affiliates | 1,105,507 | 1 | 11,253 | 11,254 | 11,254 | |||||||||||||||||||||||||
Contributions from noncontrolling interest | — | 6 | 6 | |||||||||||||||||||||||||||
Distributions declared ($0.4875 per share) | (166,218 | ) | (166,218 | ) | (166,218 | ) | ||||||||||||||||||||||||
Distributions to noncontrolling interests | — | (28,178 | ) | (28,178 | ) | |||||||||||||||||||||||||
Net income | 185,499 | 185,499 | 28,404 | 213,903 | ||||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments | 14,894 | 14,894 | 548 | 15,442 | ||||||||||||||||||||||||||
Change in net unrealized loss on derivative instruments | (9,997 | ) | (9,997 | ) | (9,997 | ) | ||||||||||||||||||||||||
Change in unrealized gain on marketable securities | 22 | 22 | 22 | |||||||||||||||||||||||||||
Repurchase of shares | (3,157,473 | ) | (3 | ) | (30,217 | ) | (30,220 | ) | (30,220 | ) | ||||||||||||||||||||
Balance at September 30, 2016 | 342,748,756 | $ | 343 | $ | 3,096,573 | $ | (681,631 | ) | $ | (134,886 | ) | $ | 2,280,399 | $ | 98,028 | $ | 2,378,427 | |||||||||||||
Balance at January 1, 2015 | 328,480,839 | $ | 328 | $ | 2,955,440 | $ | (567,806 | ) | $ | (81,007 | ) | $ | 2,306,955 | $ | 78,442 | $ | 2,385,397 | |||||||||||||
Shares issued, net of offering costs | 8,336,464 | 8 | 77,672 | 77,680 | 77,680 | |||||||||||||||||||||||||
Shares issued to directors | 10,288 | 100 | 100 | 100 | ||||||||||||||||||||||||||
Shares issued to affiliates | 1,237,623 | 1 | 11,976 | 11,977 | 11,977 | |||||||||||||||||||||||||
Contributions from noncontrolling interests | — | 15,928 | 15,928 | |||||||||||||||||||||||||||
Distributions declared ($0.4875 per share) | (162,537 | ) | (162,537 | ) | (162,537 | ) | ||||||||||||||||||||||||
Distributions to noncontrolling interests | — | (25,535 | ) | (25,535 | ) | |||||||||||||||||||||||||
Net income | 63,071 | 63,071 | 29,345 | 92,416 | ||||||||||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||||||
Foreign currency translation adjustments | (60,359 | ) | (60,359 | ) | (631 | ) | (60,990 | ) | ||||||||||||||||||||||
Change in net unrealized gain on derivative instruments | 15,665 | 15,665 | 15,665 | |||||||||||||||||||||||||||
Change in unrealized gain on marketable securities | 21 | 21 | 21 | |||||||||||||||||||||||||||
Repurchase of shares | (3,089,139 | ) | (3 | ) | (28,301 | ) | (28,304 | ) | (28,304 | ) | ||||||||||||||||||||
Balance at September 30, 2015 | 334,976,075 | $ | 334 | $ | 3,016,887 | $ | (667,272 | ) | $ | (125,680 | ) | $ | 2,224,269 | $ | 97,549 | $ | 2,321,818 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash Flows — Operating Activities | |||||||
Net Cash Provided by Operating Activities | $ | 151,716 | $ | 185,087 | |||
Cash Flows — Investing Activities | |||||||
Proceeds from sale of real estate | 258,339 | — | |||||
Acquisitions of real estate and direct financing leases | (79,528 | ) | (191,414 | ) | |||
Changes in investing restricted cash | (42,892 | ) | 5,016 | ||||
Return of capital from equity investments in real estate | 29,997 | 20,434 | |||||
Value added taxes refunded in connection with acquisition of real estate | 23,769 | 15,049 | |||||
Capital expenditures on owned real estate | (9,585 | ) | (5,661 | ) | |||
Capital contributions to equity investments in real estate | (8,348 | ) | (33,951 | ) | |||
Funding for build-to-suit projects | (2,649 | ) | (21,440 | ) | |||
Payment of deferred acquisition fees to an affiliate | (2,283 | ) | (5,894 | ) | |||
Other investing activities, net | 1,852 | 928 | |||||
Proceeds from sale of securities | 610 | — | |||||
Value added taxes paid in connection with acquisition of real estate | (232 | ) | (21,229 | ) | |||
Funding of loans receivable | — | (42,600 | ) | ||||
Net Cash Provided by (Used in) Investing Activities | 169,050 | (280,762 | ) | ||||
Cash Flows — Financing Activities | |||||||
Proceeds from Senior Credit Facility | 225,693 | 108,451 | |||||
Repayments of Senior Credit Facility | (289,558 | ) | (55,000 | ) | |||
Proceeds from mortgage financing | 204,018 | 108,181 | |||||
Distributions paid | (165,296 | ) | (161,481 | ) | |||
Scheduled payments and prepayments of mortgage principal | (155,183 | ) | (114,867 | ) | |||
Proceeds from issuance of shares, net of issuance costs | 77,717 | 77,681 | |||||
Repurchase of shares | (30,219 | ) | (28,303 | ) | |||
Distributions to noncontrolling interests | (28,178 | ) | (25,535 | ) | |||
Payment of financing costs and mortgage deposits, net of deposits refunded | (1,962 | ) | (2,713 | ) | |||
Changes in financing restricted cash | (455 | ) | (1,098 | ) | |||
Contributions from noncontrolling interest | 6 | 15,928 | |||||
Proceeds from notes payable to affiliate | — | 25,000 | |||||
Repayment of notes payable to affiliate | — | (25,000 | ) | ||||
Net Cash Used in Financing Activities | (163,417 | ) | (78,756 | ) | |||
Change in Cash and Cash Equivalents During the Period | |||||||
Effect of exchange rate changes on cash | 500 | (6,485 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 157,849 | (180,916 | ) | ||||
Cash and cash equivalents, beginning of period | 152,889 | 275,719 | |||||
Cash and cash equivalents, end of period | $ | 310,738 | $ | 94,803 |
September 30, 2016 | December 31, 2015 | ||||||
Net investments in properties | $ | 446,920 | $ | 309,030 | |||
Net investments in direct financing leases | 316,213 | 303,112 | |||||
In-place lease and tenant relationship intangible assets, net | 26,302 | 20,269 | |||||
Other assets, net | 72,359 | 66,654 | |||||
Total assets | 867,780 | 705,535 | |||||
Non-recourse debt, net | $ | 335,584 | $ | 262,830 | |||
Accounts payable, accrued expenses and other liabilities | 19,040 | 15,662 | |||||
Deferred income taxes | 14,024 | 10,675 | |||||
Total liabilities | 369,350 | 289,889 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Amounts Included in the Consolidated Statements of Income | |||||||||||||||
Asset management fees | $ | 7,489 | $ | 7,422 | $ | 22,456 | $ | 21,864 | |||||||
Available Cash Distributions | 5,276 | 5,837 | 17,803 | 17,690 | |||||||||||
Personnel and overhead reimbursements | 2,293 | 3,086 | 7,318 | 9,238 | |||||||||||
Acquisition expenses | 1,403 | — | 2,844 | 430 | |||||||||||
Interest expense on deferred acquisition fees and loan from affiliate | 47 | 113 | 176 | 246 | |||||||||||
$ | 16,508 | $ | 16,458 | $ | 50,597 | $ | 49,468 | ||||||||
Acquisition Fees Capitalized | |||||||||||||||
Personnel and overhead reimbursements | $ | 108 | $ | — | $ | 221 | $ | — | |||||||
Current acquisition fees (a) | — | 563 | 550 | 5,500 | |||||||||||
Deferred acquisition fees (a) | — | 450 | 440 | 4,182 | |||||||||||
$ | 108 | $ | 1,013 | $ | 1,211 | $ | 9,682 |
(a) | During the nine months ended September 30, 2016, non-cash investing activities were comprised of $0.2 million of current acquisition fees payable and $0.4 million of deferred acquisition fees payable. During the nine months ended September 30, 2015, non-cash investing activities were comprised of $1.5 million of deferred acquisition fees payable. |
September 30, 2016 | December 31, 2015 | ||||||
Due to Affiliates | |||||||
Deferred acquisition fees, including interest | $ | 4,436 | $ | 6,134 | |||
Asset management fees payable | 2,446 | 2,497 | |||||
Reimbursable costs | 2,187 | 3,150 | |||||
Current acquisition fees | 245 | 1,847 | |||||
Accounts payable | 75 | 6 | |||||
$ | 9,389 | $ | 13,634 |
September 30, 2016 | December 31, 2015 | ||||||
Land | $ | 565,927 | $ | 560,257 | |||
Buildings and improvements | 2,135,259 | 2,098,620 | |||||
Less: Accumulated depreciation | (271,602 | ) | (225,867 | ) | |||
$ | 2,429,584 | $ | 2,433,010 |
• | $17.3 million for a student housing accommodation in Jacksonville, Florida on January 8, 2016, |
• | $4.2 million for an industrial facility in Houston, Texas on February 10, 2016, |
• | $16.9 million for an office building in Oak Creek, Wisconsin on September 1, 2016; and |
• | $12.8 million for a warehouse and light manufacturing building in Perrysburg, Ohio on September 30, 2016. |
September 30, 2016 | December 31, 2015 | ||||||
Land | $ | 55,688 | $ | 66,066 | |||
Buildings and improvements | 203,185 | 209,455 | |||||
Less: Accumulated depreciation | (17,211 | ) | (30,308 | ) | |||
$ | 241,662 | $ | 245,213 |
Madison Storage NYC, LLC and Veritas Group IX-NYC, LLC | |||
Cash consideration | $ | 11,363 | |
Assets acquired at fair value: | |||
Land (a) | $ | 26,941 | |
Buildings (a) | 109,399 | ||
In-place lease intangible assets (a) | 9,783 | ||
Other assets acquired | 1,705 | ||
147,828 | |||
Liabilities assumed at fair value: | |||
Non-recourse debt, net | (70,578 | ) | |
Other liabilities assumed | (831 | ) | |
(71,409 | ) | ||
Total identifiable net assets | 76,419 | ||
Gain on change in control of interests | (49,922 | ) | |
Carrying value of previously held equity investment | (15,134 | ) | |
$ | 11,363 |
Madison Storage NYC, LLC and Veritas Group IX-NYC, LLC | |||
April 11, 2016 through September 30, 2016 | |||
Revenues | $ | 5,159 | |
Net income (b) (c) | $ | 42,891 | |
Net income attributable to CPA®:17 – Global (b) (c) | $ | 42,891 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Pro forma total revenues | $ | 110,076 | $ | 110,919 | $ | 329,100 | $ | 324,361 | |||||||
Pro forma net income (a) | $ | 68,347 | $ | 28,023 | $ | 167,667 | $ | 135,062 | |||||||
Pro forma net income attributable to noncontrolling interests | (8,827 | ) | (9,147 | ) | (28,405 | ) | (29,345 | ) | |||||||
Pro forma net income attributable to CPA®:17 – Global | $ | 59,520 | $ | 18,876 | $ | 139,262 | $ | 105,717 | |||||||
Pro forma basic and diluted weighted-average shares outstanding | 343,209,362 | 335,668,313 | 341,325,683 | 333,523,528 | |||||||||||
Pro-forma basic and diluted income per share | $ | 0.17 | $ | 0.06 | $ | 0.41 | $ | 0.32 |
Nine Months Ended | |||
September 30, 2016 | |||
Beginning balance | $ | 1,068 | |
Capitalized funds | 12,360 | ||
Placed into service | (11,840 | ) | |
Foreign currency translation adjustments | (10 | ) | |
Ending balance | $ | 1,578 |
September 30, 2016 | December 31, 2015 | ||||||
Real estate, net | $ | 14,850 | $ | — | |||
Assets held for sale | $ | 14,850 | $ | — |
Number of Tenants / Obligors at | Carrying Value at | |||||||||||
Internal Credit Quality Indicator | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | ||||||||
1 | — | — | $ | — | $ | — | ||||||
2 | 2 | 1 | 61,730 | 2,264 | ||||||||
3 | 10 | 10 | 427,328 | 429,212 | ||||||||
4 | 5 | 4 | 65,797 | 108,132 | ||||||||
5 | — | — | — | — | ||||||||
$ | 554,855 | $ | 539,608 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Equity Earnings from Equity Investments: | |||||||||||||||
Net Lease | $ | 4,056 | $ | 4,080 | $ | 12,369 | $ | 11,947 | |||||||
Self-Storage | — | (364 | ) | (394 | ) | (1,311 | ) | ||||||||
All Other | (174 | ) | (3,663 | ) | (2,035 | ) | (1,755 | ) | |||||||
3,882 | 53 | 9,940 | 8,881 | ||||||||||||
Amortization of Basis Differences on Equity Investments: | |||||||||||||||
Net Lease | (667 | ) | (821 | ) | (2,307 | ) | (1,447 | ) | |||||||
Self-Storage | — | (39 | ) | (39 | ) | (116 | ) | ||||||||
All Other | (435 | ) | (271 | ) | (1,062 | ) | (693 | ) | |||||||
(1,102 | ) | (1,131 | ) | (3,408 | ) | (2,256 | ) | ||||||||
Equity in earnings (losses) of equity method investments in real estate | $ | 2,780 | $ | (1,078 | ) | $ | 6,532 | $ | 6,625 |
Carrying Value at | ||||||||||||
Lessee/Equity Investee | Co-owner | Ownership Interest | September 30, 2016 | December 31, 2015 | ||||||||
Net Lease: | ||||||||||||
C1000 Logistiek Vastgoed B.V. (a) (b) | WPC | 85% | $ | 58,056 | $ | 59,629 | ||||||
U-Haul Moving Partners, Inc. and Mercury Partners, LP (c) | WPC | 12% | 38,030 | 39,309 | ||||||||
Bank Pekao S.A. (a) (c) | CPA®:18 – Global | 50% | 24,730 | 25,785 | ||||||||
BPS Nevada, LLC (c) (d) | Third Party | 15% | 22,728 | 22,007 | ||||||||
State Farm (c) | CPA®:18 – Global | 50% | 17,638 | 18,587 | ||||||||
Apply Sørco AS (a) | CPA®:18 – Global | 49% | 15,660 | 15,170 | ||||||||
Berry Plastics Corporation (c) | WPC | 50% | 15,179 | 16,094 | ||||||||
Tesco plc (a) (c) (e) | WPC | 49% | 11,734 | 11,849 | ||||||||
Hellweg Die Prof-Baumärkte GmbH & Co. KG (referred to as Hellweg 2) (a) (c) | WPC | 37% | 11,460 | 12,212 | ||||||||
Agrokor d.d. (referred to as Agrokor 5) (a) (c) | CPA®:18 – Global | 20% | 7,382 | 7,858 | ||||||||
Eroski Sociedad Cooperativa – Mallorca (a) | WPC | 30% | 7,008 | 6,790 | ||||||||
Dick’s Sporting Goods, Inc. (c) | WPC | 45% | 4,388 | 5,055 | ||||||||
233,993 | 240,345 | |||||||||||
Self-Storage: | ||||||||||||
Madison Storage NYC, LLC and Veritas Group IX-NYC, LLC (c) (f) | Third Party | N/A | — | 16,060 | ||||||||
— | 16,060 | |||||||||||
All Other: | ||||||||||||
Shelborne Property Associates, LLC (c) (d) (g) (h) | Third Party | 33% | 141,038 | 148,121 | ||||||||
BG LLH, LLC (c) (d) | Third Party | 7% | 36,942 | 37,720 | ||||||||
IDL Wheel Tenant, LLC (c) (d) (g) | Third Party | N/A | 37,925 | 44,387 | ||||||||
BPS Nevada, LLC - Preferred Equity (c) (i) | Third Party | N/A | 27,464 | 27,514 | ||||||||
243,369 | 257,742 | |||||||||||
$ | 477,362 | $ | 514,147 |
(a) | The carrying value of this investment is affected by the impact of fluctuations in the exchange rate of the applicable foreign currency. |
(b) | This investment represents a tenancy-in-common interest, whereby the property is encumbered by debt for which we are jointly and severally liable. The co-obligor is WPC and the amount due under the arrangement was approximately $72.8 million at September 30, 2016. Of this amount, $61.8 million represents the amount we agreed to pay and is included within the carrying value of this investment at September 30, 2016. |
(c) | This investment is a VIE. |
(d) | This investment is reported using the hypothetical liquidation at book value model. |
(e) | On July 29, 2016, this investment refinanced a non-recourse mortgage loan that had an outstanding balance of $33.8 million with new financing of $34.6 million, of which our proportionate share was $17.0 million. The previous loan had an interest rate of 5.9% and a maturity date of July 31, 2016, while the new loan has an interest rate of Euro Interbank Offered Rate, or EURIBOR, plus a margin of 3.3% and a term of five years. |
(f) | At December 31, 2015, the carrying value of this investment included our 45% equity interest as well as a 40% indirect economic interest. On April 11, 2016, we acquired the remaining 15% controlling interest in these entities and, as a result, now have 100% of the economic interest and consolidate this investment as of September 30, 2016 (Note 4). |
(g) | Represents a domestic ADC Arrangement. There was no unfunded balance on the loan related to this investment at September 30, 2016. |
(h) | This investment includes a cumulative guaranty of income from the hotel manager of $10.9 million which is recorded at the investee as a deferred income liability since the guaranty is subject to clawback. |
(i) | This investment represents a preferred equity interest, with a preferred rate of return between 8%-12% during 2015 and 12% during 2016 and thereafter until November 19, 2019, the date on which the preferred equity interest is redeemable. |
Weighted-Average Life | Amount | ||||
Amortizable Intangible Assets | |||||
In-place lease | 8.6 | $ | 17,229 | ||
Above-market rent | 20.0 | 221 | |||
$ | 17,450 | ||||
Amortizable Intangible Liabilities | |||||
Below-market rent | 18.8 | $ | (3,329 | ) |
September 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
Amortizable Intangible Assets | |||||||||||||||||||||||
In-place lease and tenant relationship | $ | 600,522 | $ | (166,673 | ) | $ | 433,849 | $ | 588,858 | $ | (143,635 | ) | $ | 445,223 | |||||||||
Above-market rent | 88,956 | (24,103 | ) | 64,853 | 88,288 | (20,405 | ) | 67,883 | |||||||||||||||
Below-market ground leases | 12,311 | (464 | ) | 11,847 | 12,184 | (322 | ) | 11,862 | |||||||||||||||
701,789 | (191,240 | ) | 510,549 | 689,330 | (164,362 | ) | 524,968 | ||||||||||||||||
Unamortizable Intangible Assets | |||||||||||||||||||||||
Goodwill | 304 | — | 304 | 304 | — | 304 | |||||||||||||||||
Total intangible assets | $ | 702,093 | $ | (191,240 | ) | $ | 510,853 | $ | 689,634 | $ | (164,362 | ) | $ | 525,272 | |||||||||
Amortizable Intangible Liabilities | |||||||||||||||||||||||
Below-market rent | $ | (119,549 | ) | $ | 28,268 | $ | (91,281 | ) | $ | (116,952 | ) | $ | 21,364 | $ | (95,588 | ) | |||||||
Above-market ground lease | (1,145 | ) | 41 | (1,104 | ) | (1,145 | ) | 32 | (1,113 | ) | |||||||||||||
Total intangible liabilities | $ | (120,694 | ) | $ | 28,309 | $ | (92,385 | ) | $ | (118,097 | ) | $ | 21,396 | $ | (96,701 | ) |
September 30, 2016 | December 31, 2015 | ||||||||||||||||
Level | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Non-recourse debt, net (a) (b) | 3 | $ | 2,017,477 | $ | 2,069,921 | $ | 1,881,774 | $ | 1,937,459 | ||||||||
CMBS (c) | 3 | 4,006 | 8,194 | 2,765 | 8,739 |
(a) | In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net and Senior Unsecured Notes, net as of December 31, 2015, for the amount of $12.5 million (Note 2). The carrying value of Non-recourse debt, net includes unamortized deferred financing costs of $10.2 million and $12.5 million at September 30, 2016 and December 31, 2015, respectively. |
(b) | We determined the estimated fair value of these financial instruments using a discounted cash flow model that estimates the present value of the future loan payments by discounting such payments at current estimated market interest rates. The estimated market interest rates take into account interest rate risk and the value of the underlying collateral, which includes quality of the collateral, the credit quality of the tenant/obligor, and the time until maturity. |
(c) | The carrying value of our CMBS is inclusive of impairment charges for the year ended December 31, 2015, as well as accretion related to the estimated cash flows expected to be received. During the nine months ended September 30, 2015, we recorded impairment charges on our CMBS of $1.0 million. There were no purchases, sales, or impairment charges recognized during the three or nine months ended September 30, 2016 and the three months ended September 30, 2015. |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | ||||||||||||||
Fair Value Measurements | Total Impairment Charges | Fair Value Measurements | Total Impairment Charges | ||||||||||||
Impairment Charges | |||||||||||||||
Real estate | $ | 14,850 | $ | 29,183 | $ | — | $ | — | |||||||
$ | 29,183 | $ | — |
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||||||
Fair Value Measurements | Total Impairment Charges | Fair Value Measurements | Total Impairment Charges | ||||||||||||
Impairment Charges | |||||||||||||||
Real estate | $ | 14,850 | $ | 29,183 | $ | — | $ | — | |||||||
$ | 29,183 | $ | — |
Derivatives Designated as Hedging Instruments | Asset Derivatives Fair Value at | Liability Derivatives Fair Value at | ||||||||||||||||
Balance Sheet Location | September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | ||||||||||||||
Foreign currency forward contracts | Other assets, net | $ | 30,618 | $ | 41,850 | $ | — | $ | — | |||||||||
Interest rate caps | Other assets, net | 40 | — | — | — | |||||||||||||
Foreign currency collars | Other assets, net | — | 4 | — | — | |||||||||||||
Interest rate swaps | Accounts payable, accrued expenses and other liabilities | — | — | (11,029 | ) | (10,732 | ) | |||||||||||
Foreign currency collars | Accounts payable, accrued expenses and other liabilities | — | — | (312 | ) | (109 | ) | |||||||||||
Derivatives Not Designated as Hedging Instruments | ||||||||||||||||||
Stock warrants | Other assets, net | 1,848 | 1,782 | — | — | |||||||||||||
Swaption | Other assets, net | 57 | 309 | — | — | |||||||||||||
Total derivatives | $ | 32,563 | $ | 43,945 | $ | (11,341 | ) | $ | (10,841 | ) |
Amount of Gain (Loss) Recognized on Derivatives in Other Comprehensive Income (Loss) (Effective Portion) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Derivatives in Cash Flow Hedging Relationships | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Foreign currency forward contracts | $ | (4,179 | ) | $ | (978 | ) | $ | (9,324 | ) | $ | 15,626 | |||||
Interest rate swaps | 2,152 | (2,110 | ) | (437 | ) | (43 | ) | |||||||||
Foreign currency collars | (325 | ) | — | (181 | ) | — | ||||||||||
Interest rate caps | (37 | ) | — | (37 | ) | — | ||||||||||
Derivatives in Net Investment Hedging Relationships (a) | ||||||||||||||||
Foreign currency forward contracts | (170 | ) | (20 | ) | (1,431 | ) | 366 | |||||||||
Foreign currency collars | (13 | ) | — | (21 | ) | — | ||||||||||
Total | $ | (2,572 | ) | $ | (3,108 | ) | $ | (11,431 | ) | $ | 15,949 |
Amount of Gain (Loss) Reclassified from Other Comprehensive Income (Loss) into Income (Effective Portion) | ||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Location of Gain (Loss) Reclassified to Income | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Interest rate swaps | Interest expense | $ | (1,869 | ) | $ | (1,913 | ) | $ | (5,492 | ) | $ | (6,044 | ) | |||||
Foreign currency forward contracts | Other income and (expenses) | 2,172 | 2,296 | 5,850 | 6,662 | |||||||||||||
Total | $ | 303 | $ | 383 | $ | 358 | $ | 618 |
(a) | The effective portion of the change in fair value and the settlement of these contracts are reported in the foreign currency translation adjustment section of Other comprehensive income (loss) until the underlying investment is sold, at which time we reclassify the gain or loss to earnings. |
Amount of Gain (Loss) on Derivatives Recognized in Income | ||||||||||||||||||
Derivatives Not in Cash Flow Hedging Relationships | Location of Gain (Loss) Recognized in Income | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Stock warrants | Other income and (expenses) | $ | 165 | $ | — | $ | 66 | 66 | ||||||||||
Swaption | Other income and (expenses) | (20 | ) | (212 | ) | (251 | ) | (177 | ) | |||||||||
Embedded credit derivatives | Other income and (expenses) | — | (26 | ) | — | 235 | ||||||||||||
Foreign currency forward contracts | Other income and (expenses) | — | — | — | (16 | ) | ||||||||||||
Derivatives in Cash Flow Hedging Relationships | ||||||||||||||||||
Interest rate swaps (a) | Interest expense | 147 | 61 | 243 | 233 | |||||||||||||
Foreign currency collar (a) | Other income and (expenses) | (5 | ) | — | (5 | ) | — | |||||||||||
Total | $ | 287 | $ | (177 | ) | $ | 53 | $ | 341 |
(a) | Relates to the ineffective portion of the hedging relationship. |
Interest Rate Derivatives | Number of Instruments | Notional Amount | Fair Value at September 30, 2016 (a) | |||||||
Designated as Cash Flow Hedging Instruments | ||||||||||
Interest rate swaps | 14 | 232,029 | USD | $ | (9,787 | ) | ||||
Interest rate swaps | 6 | 44,681 | EUR | (1,241 | ) | |||||
Interest rate cap | 1 | 12,402 | EUR | 26 | ||||||
Interest rate cap | 1 | 6,394 | GBP | 14 | ||||||
Not Designated as Hedging Instrument | ||||||||||
Swaption | 1 | 13,230 | USD | 57 | ||||||
$ | (10,931 | ) |
(a) | Fair value amount is based on the exchange rate of the euro at September 30, 2016, as applicable. |
Interest Rate Derivative | Ownership Interest in Investee at September 30, 2016 | Number of Instruments | Notional Amount | Fair Value at September 30, 2016 (a) | ||||||||
Interest rate swap | 85% | 1 | 10,653 | EUR | $ | (570 | ) | |||||
Interest rate cap | 49% | 1 | 31,100 | EUR | $ | 26 |
(a) | Fair value amount is based on the exchange rate of the euro at September 30, 2016. |
Foreign Currency Derivatives | Number of Instruments | Notional Amount | Fair Value at September 30, 2016 | |||||||
Designated as Cash Flow Hedging Instruments | ||||||||||
Foreign currency forward contracts | 65 | 129,596 | EUR | $ | 28,172 | |||||
Foreign currency zero-cost collars | 2 | 15,100 | EUR | (278 | ) | |||||
Foreign currency forward contracts | 14 | 10,104 | NOK | 107 | ||||||
Foreign currency zero-cost collars | 3 | 2,000 | NOK | (15 | ) | |||||
Designated as Net Investment Hedging Instruments | ||||||||||
Foreign currency forward contracts | 6 | 848,490 | JPY | 2,277 | ||||||
Foreign currency forward contracts | 3 | 5,549 | NOK | 61 | ||||||
Foreign currency zero-cost collar | 1 | 2,500 | NOK | (19 | ) | |||||
$ | 30,305 |
Interest Rate at September 30, 2016 | Outstanding Balance at | |||||||||
Senior Credit Facility | September 30, 2016 | December 31, 2015 | ||||||||
Revolver: | ||||||||||
Revolver - borrowing in U.S. dollars | —% | $ | — | $ | 112,834 | |||||
Term Loan | LIBOR + 1.55% | 50,000 | — | |||||||
$ | 50,000 | $ | 112,834 |
Years Ending December 31, | Total | |||
2016 (remainder) (a) | $ | 199,531 | ||
2017 | 418,793 | |||
2018 (b) | 228,260 | |||
2019 | 33,579 | |||
2020 | 142,789 | |||
Thereafter through 2031 | 1,058,792 | |||
2,081,744 | ||||
Deferred financing costs (c) | (10,388 | ) | ||
Unamortized discount, net | (4,160 | ) | ||
Total | $ | 2,067,196 |
(a) | Includes $180.6 million of debt that matured on September 28, 2016; however, we are in negotiations with the same lenders to refinance the outstanding debt, which is expected to occur before December 31, 2016. |
(b) | Includes the $50.0 million Term Loan at September 30, 2016 under our Senior Credit Facility, which is scheduled to mature on August 26, 2018, unless extended pursuant to its terms. |
(c) | In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net and the Senior Credit Facility, net as of December 31, 2015 (Note 2). |
Three Months Ended September 30, 2016 | |||||||||||||||
Gains and Losses on Derivative Instruments | Gains and Losses on Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||||
Beginning balance | $ | 20,595 | $ | (63 | ) | $ | (156,633 | ) | $ | (136,101 | ) | ||||
Other comprehensive income before reclassifications | (2,089 | ) | 8 | 3,707 | 1,626 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 1,869 | — | — | 1,869 | |||||||||||
Other income and (expenses) | (2,172 | ) | — | — | (2,172 | ) | |||||||||
Total | (303 | ) | — | — | (303 | ) | |||||||||
Net current-period Other comprehensive income | (2,392 | ) | 8 | 3,707 | 1,323 | ||||||||||
Net current-period Other comprehensive gain attributable to noncontrolling interests | — | — | (108 | ) | (108 | ) | |||||||||
Ending balance | $ | 18,203 | $ | (55 | ) | $ | (153,034 | ) | $ | (134,886 | ) |
Three Months Ended September 30, 2015 | |||||||||||||||
Gains and Losses on Derivative Instruments | Gains and Losses on Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||||
Beginning balance | $ | 26,118 | $ | (92 | ) | $ | (147,368 | ) | $ | (121,342 | ) | ||||
Other comprehensive loss before reclassifications | (2,759 | ) | 7 | (1,100 | ) | (3,852 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 1,913 | — | — | 1,913 | |||||||||||
Other income and (expenses) | (2,296 | ) | — | — | (2,296 | ) | |||||||||
Total | (383 | ) | — | — | (383 | ) | |||||||||
Net current-period Other comprehensive loss | (3,142 | ) | 7 | (1,100 | ) | (4,235 | ) | ||||||||
Net current-period Other comprehensive gain attributable to noncontrolling interests | — | — | (103 | ) | (103 | ) | |||||||||
Ending balance | $ | 22,976 | $ | (85 | ) | $ | (148,571 | ) | $ | (125,680 | ) |
Nine Months Ended September 30, 2016 | |||||||||||||||
Gains and Losses on Derivative Instruments | Gains and Losses on Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||||
Beginning balance | $ | 28,200 | $ | (77 | ) | $ | (167,928 | ) | $ | (139,805 | ) | ||||
Other comprehensive income before reclassifications | (9,639 | ) | 22 | 15,442 | 5,825 | ||||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 5,492 | — | — | 5,492 | |||||||||||
Other income and (expenses) | (5,850 | ) | — | — | (5,850 | ) | |||||||||
Total | (358 | ) | — | — | (358 | ) | |||||||||
Net current-period Other comprehensive income | (9,997 | ) | 22 | 15,442 | 5,467 | ||||||||||
Net current-period Other comprehensive gain attributable to noncontrolling interests | — | — | (548 | ) | (548 | ) | |||||||||
Ending balance | $ | 18,203 | $ | (55 | ) | $ | (153,034 | ) | $ | (134,886 | ) |
Nine Months Ended September 30, 2015 | |||||||||||||||
Gains and Losses on Derivative Instruments | Gains and Losses on Marketable Securities | Foreign Currency Translation Adjustments | Total | ||||||||||||
Beginning balance | $ | 7,311 | $ | (106 | ) | $ | (88,212 | ) | $ | (81,007 | ) | ||||
Other comprehensive loss before reclassifications | 16,283 | 21 | (60,990 | ) | (44,686 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss to: | |||||||||||||||
Interest expense | 6,044 | — | — | 6,044 | |||||||||||
Other income and (expenses) | (6,662 | ) | — | — | (6,662 | ) | |||||||||
Total | (618 | ) | — | — | (618 | ) | |||||||||
Net current-period Other comprehensive loss | 15,665 | 21 | (60,990 | ) | (45,304 | ) | |||||||||
Net current-period Other comprehensive loss attributable to noncontrolling interests | — | — | 631 | 631 | |||||||||||
Ending balance | $ | 22,976 | $ | (85 | ) | $ | (148,571 | ) | $ | (125,680 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | $ | 6,964 | $ | 8,483 | $ | 21,562 | $ | 24,793 | |||||||
Expenses | (5,714 | ) | (7,653 | ) | (18,746 | ) | (23,081 | ) | |||||||
Gain on sale of real estate, net of tax | 82,287 | — | 132,702 | 2,197 | |||||||||||
Impairment charges | (29,183 | ) | — | (29,183 | ) | — | |||||||||
Loss on extinguishment of debt | (8,218 | ) | — | (15,807 | ) | — | |||||||||
Income from properties sold or classified as held for sale, net of income taxes | $ | 46,136 | $ | 830 | $ | 90,528 | $ | 3,909 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Lease | |||||||||||||||
Revenues | $ | 98,243 | $ | 92,081 | $ | 286,214 | $ | 271,705 | |||||||
Operating expenses (a) | (68,453 | ) | (33,831 | ) | (139,970 | ) | (100,733 | ) | |||||||
Interest expense | (22,302 | ) | (21,762 | ) | (66,583 | ) | (63,561 | ) | |||||||
Other income and expenses, excluding interest expense | 3,592 | 2,292 | 9,324 | 9,365 | |||||||||||
Provision for income taxes | (590 | ) | (1,038 | ) | (2,570 | ) | (2,584 | ) | |||||||
Gain on sale of real estate, net of tax | — | — | — | 2,197 | |||||||||||
Net income attributable to noncontrolling interests | (3,551 | ) | (3,310 | ) | (10,601 | ) | (11,655 | ) | |||||||
Net income attributable to CPA®:17 – Global | $ | 6,939 | $ | 34,432 | $ | 75,814 | $ | 104,734 | |||||||
Self-Storage | |||||||||||||||
Revenues | $ | 10,135 | $ | 11,898 | $ | 35,213 | $ | 34,380 | |||||||
Operating expenses | (7,717 | ) | (8,002 | ) | (28,632 | ) | (24,049 | ) | |||||||
Interest expense | (2,211 | ) | (1,927 | ) | (6,746 | ) | (5,729 | ) | |||||||
Other income and expenses, excluding interest expense (b) | (15,991 | ) | (403 | ) | 25,905 | (1,428 | ) | ||||||||
Provision for income taxes | (16 | ) | (46 | ) | (133 | ) | (153 | ) | |||||||
Gain on sale of real estate, net of tax | 82,287 | — | 132,702 | — | |||||||||||
Net income attributable to CPA®:17 – Global | $ | 66,487 | $ | 1,520 | $ | 158,309 | $ | 3,021 | |||||||
All Other | |||||||||||||||
Revenues | $ | 1,698 | $ | 4,219 | $ | 5,060 | $ | 10,530 | |||||||
Operating expenses | (29 | ) | (38 | ) | (81 | ) | (1,682 | ) | |||||||
Interest expense | — | (47 | ) | (6 | ) | 446 | |||||||||
Other income and expenses, excluding interest expense | (603 | ) | (3,327 | ) | (2,999 | ) | (1,138 | ) | |||||||
Provision for income taxes | (1,442 | ) | (480 | ) | (3,373 | ) | (1,278 | ) | |||||||
Gain on sale of real estate, net of tax | — | — | — | — | |||||||||||
Net (loss) income attributable to CPA®:17 – Global | $ | (376 | ) | $ | 327 | $ | (1,399 | ) | $ | 6,878 | |||||
Corporate | |||||||||||||||
Unallocated Corporate Overhead (c) | $ | (9,556 | ) | $ | (10,390 | ) | $ | (29,422 | ) | $ | (33,872 | ) | |||
Net income attributable to noncontrolling interests – Available Cash Distributions | $ | (5,276 | ) | $ | (5,837 | ) | $ | (17,803 | ) | $ | (17,690 | ) | |||
Total Company | |||||||||||||||
Revenues | $ | 110,076 | $ | 108,202 | $ | 326,487 | $ | 316,620 | |||||||
Operating expenses (a) | (87,442 | ) | (54,253 | ) | (203,684 | ) | (162,156 | ) | |||||||
Interest expense | (25,048 | ) | (24,104 | ) | (75,027 | ) | (69,346 | ) | |||||||
Other income and expenses, excluding interest expense (b) | (10,495 | ) | 1,030 | 39,955 | 9,542 | ||||||||||
Provision for income taxes | (2,333 | ) | (1,676 | ) | (6,530 | ) | (4,441 | ) | |||||||
Gain on sale of real estate, net of tax | 82,287 | — | 132,702 | 2,197 | |||||||||||
Net income attributable to noncontrolling interests | (8,827 | ) | (9,147 | ) | (28,404 | ) | (29,345 | ) | |||||||
Net income attributable to CPA®:17 – Global | $ | 58,218 | $ | 20,052 | $ | 185,499 | $ | 63,071 |
Total Long-Lived Assets at (d) | Total Assets at | ||||||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | ||||||||||||
Net Lease (e) | $ | 3,190,781 | $ | 3,169,885 | $ | 3,864,659 | $ | 3,956,239 | |||||||
Self-Storage | 241,662 | 261,273 | 255,441 | 269,081 | |||||||||||
All Other | 243,348 | 257,844 | 293,380 | 309,288 | |||||||||||
Corporate | — | — | 349,407 | 78,582 | |||||||||||
Total Company | $ | 3,675,791 | $ | 3,689,002 | $ | 4,762,887 | $ | 4,613,190 |
(a) | Includes an impairment charge of $29.2 million recognized on one property for both the three and nine months ended September 30, 2016 (Note 8). |
(b) | Includes a Gain on change in control of interests of $49.9 million for the nine months ended September 30, 2016 (Note 4). |
(c) | Included in unallocated corporate overhead are asset management fees, and general and administrative expenses, as well as interest expense and other charges related to our Senior Credit Facility. These expenses are calculated and reported at the portfolio level and not evaluated as part of any segment’s operating performance. |
(d) | Includes Net investments in real estate and Equity investments in real estate. |
(e) |
• | $18.3 million for a student housing accommodation; |
• | $8.8 million for an industrial facility; |
• | $25.6 million for the remaining 15% controlling interest in five self-storage properties in which we previously held an 85% economic interest as an unconsolidated equity investment; |
• | $12.0 million for six newspaper printing facilities; |
• | $9.6 million for build-to-suit financing for an existing property; |
• | $17.7 million for an office building; and |
• | $13.5 million for a warehouse and light manufacturing building. |
September 30, 2016 | December 31, 2015 | ||||||
Number of net-leased properties | 388 | 377 | |||||
Number of operating properties (a) | 38 | 72 | |||||
Number of tenants (b) | 116 | 111 | |||||
Total square footage (in thousands) | 44,234 | 45,741 | |||||
Occupancy (b) | 99.73 | % | 99.96 | % | |||
Weighted-average lease term (in years) (c) | 13.0 | 13.7 | |||||
Number of countries | 13 | 13 | |||||
Total assets (in thousands) (c) | $ | 4,762,887 | $ | 4,613,190 | |||
Net investments in real estate (in thousands) (c) | 3,198,429 | 3,174,855 |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Acquisition volume — consolidated (in millions) (c) (d) (e) | $ | 105.5 | $ | 250.8 | |||
Acquisition volume — pro rata (in millions) (d) (e) (f) | 105.5 | 259.9 | |||||
Financing obtained — consolidated (in millions) (c) | 122.2 | 108.2 | |||||
Financing obtained — pro rata (in millions) (f) | 139.2 | 108.2 | |||||
Average U.S. dollar/euro exchange rate | 1.1161 | 1.1148 | |||||
Average U.S. dollar/British pound sterling exchange rate (h) | 1.3939 | 1.5324 | |||||
Change in the CPI (i) | 2.1 | % | 1.3 | % | |||
Change in the Harmonized Index of Consumer Prices (i) | 0.4 | % | 0.3 | % |
(a) | Operating properties are comprised of full or partial ownership interests in 37 self-storage properties with an average occupancy of 92.3% at September 30, 2016; 71 self-storage properties with an average occupancy of 90.6% at December 31, 2015; and one hotel at each date; all of which are managed by third parties. |
(b) | Excludes operating properties. |
(c) | Represents consolidated basis. |
(d) | Includes build-to-suit transactions, which are reflected as the total commitment for the build-to-suit funding. |
(e) | Includes acquisition-related costs and fees, which are included in Acquisition expenses in the consolidated financial statements. |
(f) | Represents pro rata basis. See Terms and Definitions below for a description of pro rata amounts. |
(g) | Amount for the nine months ended September 30, 2016 includes our proportionate share of the refinancing of a non-recourse mortgage loan of $17.0 million (Note 6). |
(h) | The average exchange rate for the U.S. dollar in relation to the British pound sterling decreased by 9.0% during the nine months ended September 30, 2016 as compared to the same period in 2015, resulting in a negative impact on earnings in 2016 from our British pound sterling-denominated investments. |
(i) | Many of our lease agreements include contractual increases indexed to changes in the U.S. Consumer Price Index, or CPI, or similar indices. |
Consolidated | Pro Rata | |||||||||||||||||||
Tenant/Lease Guarantor | Property Type | Tenant Industry | Location | ABR | Percent | ABR | Percent | |||||||||||||
Metro Cash & Carry Italia S.p.A. (a) | Retail | Retail Stores | Germany; Italy | $ | 27,243 | 8 | % | $ | 27,243 | 8 | % | |||||||||
The New York Times Company | Office | Media: Advertising, Printing and Publishing | New York, NY | 26,844 | 8 | % | 14,764 | 4 | % | |||||||||||
Agrokor d.d. (a) | Retail; Warehouse | Grocery | Croatia | 21,842 | 7 | % | 23,104 | 6 | % | |||||||||||
General Parts, Inc. | Office; Warehouse | Retail Stores | Various U.S. | 18,345 | 6 | % | 18,345 | 5 | % | |||||||||||
Lineage Logistics Holdings, LLC | Warehouse | Business Services | Various U.S. | 14,024 | 4 | % | 14,024 | 4 | % | |||||||||||
KBR, Inc. | Office | Business Services | Houston, TX | 13,786 | 4 | % | 13,786 | 4 | % | |||||||||||
Blue Cross and Blue Shield of Minnesota, Inc. | Office; Other | Insurance | Various MN | 12,206 | 4 | % | 12,206 | 3 | % | |||||||||||
IDL Master Tenant, LLC | Retail | Retail Stores | Orlando, FL | 10,290 | 3 | % | 10,290 | 3 | % | |||||||||||
Eroski Sociedad Cooperativa (a) | Retail; Warehouse | Grocery | Spain | 9,216 | 3 | % | 9,897 | 3 | % | |||||||||||
FM Logistics (a) | Industrial; Warehouse | Cargo Transportation | Czech Republic; Poland; Slovakia | 9,124 | 3 | % | 9,124 | 3 | % | |||||||||||
Total | $ | 162,920 | 50 | % | $ | 152,783 | 43 | % |
(a) | ABR amounts are subject to fluctuations in foreign currency exchange rates. |
Consolidated | Pro Rata | |||||||||||||
Region | ABR | Percent | ABR | Percent | ||||||||||
United States | ||||||||||||||
South | $ | 66,234 | 20 | % | $ | 71,868 | 20 | % | ||||||
Midwest | 62,275 | 19 | % | 67,282 | 19 | % | ||||||||
East | 56,729 | 17 | % | 44,020 | 12 | % | ||||||||
West | 30,955 | 10 | % | 30,133 | 9 | % | ||||||||
United States Total | 216,193 | 66 | % | 213,303 | 60 | % | ||||||||
International | ||||||||||||||
Italy | 25,647 | 8 | % | 25,647 | 7 | % | ||||||||
Croatia | 21,842 | 7 | % | 23,104 | 6 | % | ||||||||
Poland | 20,944 | 6 | % | 25,207 | 7 | % | ||||||||
Spain | 17,121 | 5 | % | 17,802 | 5 | % | ||||||||
Germany | 10,542 | 3 | % | 19,879 | 6 | % | ||||||||
United Kingdom | 5,028 | 2 | % | 5,028 | 1 | % | ||||||||
Netherlands | 3,774 | 1 | % | 15,387 | 4 | % | ||||||||
Other (a) | 7,320 | 2 | % | 13,108 | 4 | % | ||||||||
International Total | 112,218 | 34 | % | 145,162 | 40 | % | ||||||||
Total | $ | 328,411 | 100 | % | $ | 358,465 | 100 | % |
(a) | Consolidated includes ABR from tenants in Japan, Czech Republic, and Slovakia. Pro rata includes ABR from tenants in the aforementioned countries plus Hungary and Norway. |
Consolidated | Pro Rata | |||||||||||||
Property Type | ABR | Percent | ABR | Percent | ||||||||||
Office | $ | 103,805 | 32 | % | $ | 101,806 | 28 | % | ||||||
Retail | 79,462 | 24 | % | 90,416 | 25 | % | ||||||||
Warehouse | 75,080 | 23 | % | 91,416 | 26 | % | ||||||||
Industrial | 52,599 | 16 | % | 53,205 | 15 | % | ||||||||
Other (a) | 17,465 | 5 | % | 21,622 | 6 | % | ||||||||
Total | $ | 328,411 | 100 | % | $ | 358,465 | 100 | % |
(a) | Consolidated includes ABR from tenants with the following property types: education facility, sports facility, land, and residential. Pro rata includes ABR from tenants with the aforementioned property types plus self-storage. |
Consolidated | Pro Rata | |||||||||||||
Industry Type | ABR | Percent | ABR | Percent | ||||||||||
Retail Stores | $ | 87,541 | 27 | % | $ | 100,554 | 28 | % | ||||||
Business Services | 37,911 | 12 | % | 40,590 | 11 | % | ||||||||
Grocery | 31,058 | 9 | % | 47,723 | 13 | % | ||||||||
Media: Advertising, Printing, and Publishing | 30,768 | 9 | % | 18,688 | 5 | % | ||||||||
Capital Equipment | 14,232 | 4 | % | 14,232 | 4 | % | ||||||||
Cargo Transportation | 12,793 | 4 | % | 14,247 | 4 | % | ||||||||
Consumer Services | 12,321 | 4 | % | 13,232 | 4 | % | ||||||||
Insurance | 12,206 | 4 | % | 15,898 | 4 | % | ||||||||
Telecommunications | 11,062 | 3 | % | 11,087 | 3 | % | ||||||||
Automotive | 10,759 | 3 | % | 9,709 | 3 | % | ||||||||
Media: Broadcasting and Subscription | 9,620 | 3 | % | 9,620 | 3 | % | ||||||||
Non-Durable Consumer Goods | 9,495 | 3 | % | 7,441 | 2 | % | ||||||||
Hotel, Gaming, and Leisure | 8,758 | 3 | % | 8,798 | 2 | % | ||||||||
Beverage, Food, and Tobacco | 8,515 | 3 | % | 8,515 | 2 | % | ||||||||
High Tech Industries | 7,255 | 2 | % | 6,160 | 2 | % | ||||||||
Healthcare and Pharmaceuticals | 6,484 | 2 | % | 6,484 | 2 | % | ||||||||
Banking | 4,611 | 1 | % | 8,810 | 2 | % | ||||||||
Containers, Packing, and Glass | 3,886 | 1 | % | 7,541 | 2 | % | ||||||||
Other (a) | 9,136 | 3 | % | 9,136 | 4 | % | ||||||||
Total | $ | 328,411 | 100 | % | $ | 358,465 | 100 | % |
(a) | Includes ABR from tenants in the following industries: construction and building; aerospace and defense; consumer transportation; durable consumer goods; chemicals, plastics, and rubber; real estate; metals and mining; finance; and environmental industries. |
Consolidated | Pro Rata | |||||||||||||||||||
Year of Lease Expiration (a) | Number of Leases Expiring | ABR | Percent | Number of Leases Expiring | ABR | Percent | ||||||||||||||
Remaining 2016 (b) | 8 | 2,198 | 1 | % | 8 | 410 | — | % | ||||||||||||
2017 | 7 | 790 | — | % | 8 | 901 | — | % | ||||||||||||
2018 | 2 | 124 | — | % | 5 | 147 | — | % | ||||||||||||
2019 | 5 | 2,481 | 1 | % | 5 | 2,481 | 1 | % | ||||||||||||
2020 | 6 | 284 | — | % | 6 | 284 | — | % | ||||||||||||
2021 | 8 | 2,097 | 1 | % | 8 | 1,686 | 1 | % | ||||||||||||
2022 | 1 | 3,011 | 1 | % | 2 | 4,452 | 1 | % | ||||||||||||
2023 | 2 | 305 | — | % | 6 | 4,432 | 1 | % | ||||||||||||
2024 | 7 | 39,323 | 12 | % | 11 | 32,773 | 9 | % | ||||||||||||
2025 | 17 | 24,522 | 7 | % | 17 | 24,522 | 7 | % | ||||||||||||
2026 | 11 | 12,081 | 4 | % | 17 | 23,694 | 7 | % | ||||||||||||
2027 | 22 | 30,164 | 9 | % | 22 | 30,164 | 8 | % | ||||||||||||
2028 | 26 | 38,609 | 12 | % | 28 | 43,017 | 12 | % | ||||||||||||
2029 | 4 | 6,333 | 2 | % | 4 | 6,333 | 2 | % | ||||||||||||
Thereafter | 59 | 166,089 | 50 | % | 64 | 183,169 | 51 | % | ||||||||||||
Total | 185 | $ | 328,411 | 100 | % | 211 | $ | 358,465 | 100 | % |
(a) | Assumes tenant does not exercise renewal option. |
(b) | Month-to-month leases are included in 2016 ABR. |
State | Number of Properties | Square Footage | ||||
Illinois | 13 | 900 | ||||
California | 7 | 476 | ||||
New York | 5 | 335 | ||||
Florida | 4 | 260 | ||||
Hawaii | 4 | 259 | ||||
Georgia | 2 | 79 | ||||
North Carolina | 1 | 80 | ||||
Texas | 1 | 75 | ||||
Consolidated Total | 37 | 2,464 | ||||
Pro Rata Total (a) | 37 | 2,464 |
(a) | See Terms and Definitions below for a description of pro rata amounts. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Total revenues | $ | 110,076 | $ | 108,202 | $ | 326,487 | $ | 316,620 | |||||||
Net income attributable to CPA®:17 – Global | 58,218 | 20,052 | 185,499 | 63,071 | |||||||||||
Cash distributions paid | 55,408 | 54,182 | 165,296 | 161,481 | |||||||||||
Net cash provided by operating activities | 151,716 | 185,087 | |||||||||||||
Net cash provided by (used in) investing activities | 169,050 | (280,762 | ) | ||||||||||||
Net cash used in financing activities | (163,417 | ) | (78,756 | ) | |||||||||||
Supplemental financial measures: | |||||||||||||||
FFO attributable to CPA®:17 – Global (a) | 43,710 | 54,759 | 194,586 | 162,553 | |||||||||||
MFFO attributable to CPA®:17 – Global (a) | 47,886 | 47,908 | 152,211 | 147,953 | |||||||||||
Adjusted MFFO attributable to CPA®:17 – Global (a) | 51,795 | 50,325 | 161,708 | 155,614 |
(a) | We consider the performance metrics listed above, including Funds from operations, or FFO, Modified funds from operations, or MFFO, and Adjusted modified funds from operations, or Adjusted MFFO, which are supplemental measures that are not defined by GAAP, or non-GAAP measures, to be important measures in the evaluation of our results of operations and capital resources. We evaluate our results of operations with a primary focus on the ability to generate cash flow necessary to meet our objective of funding distributions to stockholders. See Supplemental Financial Measures below for our definitions of these non-GAAP measures and reconciliations to their most directly comparable GAAP measures. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
Revenues | |||||||||||||||||||||||
Lease revenues | $ | 89,982 | $ | 83,461 | $ | 6,521 | $ | 261,970 | $ | 239,943 | $ | 22,027 | |||||||||||
Operating property revenues | 10,792 | 12,686 | (1,894 | ) | 37,281 | 36,755 | 526 | ||||||||||||||||
Reimbursable tenant costs | 7,061 | 7,456 | (395 | ) | 20,768 | 22,089 | (1,321 | ) | |||||||||||||||
Interest income and other | 2,241 | 4,599 | (2,358 | ) | 6,468 | 17,833 | (11,365 | ) | |||||||||||||||
110,076 | 108,202 | 1,874 | 326,487 | 316,620 | 9,867 | ||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||
Net-leased properties | 27,732 | 23,880 | 3,852 | 77,202 | 69,432 | 7,770 | |||||||||||||||||
Operating properties | 3,512 | 2,964 | 548 | 10,357 | 9,243 | 1,114 | |||||||||||||||||
31,244 | 26,844 | 4,400 | 87,559 | 78,675 | 8,884 | ||||||||||||||||||
Property expenses: | |||||||||||||||||||||||
Asset management fees | 7,489 | 7,422 | 67 | 22,456 | 21,864 | 592 | |||||||||||||||||
Reimbursable tenant costs | 7,061 | 7,456 | (395 | ) | 20,768 | 22,089 | (1,321 | ) | |||||||||||||||
Operating properties | 4,199 | 5,029 | (830 | ) | 14,567 | 14,766 | (199 | ) | |||||||||||||||
Net-leased properties | 2,925 | 2,605 | 320 | 10,142 | 9,406 | 736 | |||||||||||||||||
21,674 | 22,512 | (838 | ) | 67,933 | 68,125 | (192 | ) | ||||||||||||||||
Impairment charges | 29,183 | — | 29,183 | 29,183 | 1,023 | 28,160 | |||||||||||||||||
General and administrative | 3,895 | 4,897 | (1,002 | ) | 12,223 | 13,690 | (1,467 | ) | |||||||||||||||
Acquisition expenses | 1,446 | — | 1,446 | 6,786 | 643 | 6,143 | |||||||||||||||||
87,442 | 54,253 | 33,189 | 203,684 | 162,156 | 41,528 | ||||||||||||||||||
Other Income and Expenses | |||||||||||||||||||||||
Interest expense | (25,048 | ) | (24,104 | ) | (944 | ) | (75,027 | ) | (69,346 | ) | (5,681 | ) | |||||||||||
Loss on extinguishment of debt | (15,990 | ) | (5 | ) | (15,985 | ) | (23,580 | ) | (275 | ) | (23,305 | ) | |||||||||||
Equity in earnings (losses) of equity method investments in real estate | 2,780 | (1,078 | ) | 3,858 | 6,532 | 6,625 | (93 | ) | |||||||||||||||
Other income and (expenses) | 2,715 | 2,113 | 602 | 7,081 | 3,192 | 3,889 | |||||||||||||||||
Gain on change in control of interests | — | — | — | 49,922 | — | 49,922 | |||||||||||||||||
(35,543 | ) | (23,074 | ) | (12,469 | ) | (35,072 | ) | (59,804 | ) | 24,732 | |||||||||||||
(Loss) income before income taxes and gain on sale of real estate | (12,909 | ) | 30,875 | (43,784 | ) | 87,731 | 94,660 | (6,929 | ) | ||||||||||||||
Provision for income taxes | (2,333 | ) | (1,676 | ) | (657 | ) | (6,530 | ) | (4,441 | ) | (2,089 | ) | |||||||||||
(Loss) income before gain on sale of real estate | (15,242 | ) | 29,199 | (44,441 | ) | 81,201 | 90,219 | (9,018 | ) | ||||||||||||||
Gain on sale of real estate, net of tax | 82,287 | — | 82,287 | 132,702 | 2,197 | 130,505 | |||||||||||||||||
Net Income | 67,045 | 29,199 | 37,846 | 213,903 | 92,416 | 121,487 | |||||||||||||||||
Net income attributable to noncontrolling interests | (8,827 | ) | (9,147 | ) | 320 | (28,404 | ) | (29,345 | ) | 941 | |||||||||||||
Net Income Attributable to CPA®:17 – Global | $ | 58,218 | $ | 20,052 | $ | 38,166 | $ | 185,499 | $ | 63,071 | $ | 122,428 | |||||||||||
Supplemental financial measure: (a) | |||||||||||||||||||||||
MFFO Attributable to CPA®:17 – Global | $ | 47,886 | $ | 47,908 | $ | (22 | ) | $ | 152,211 | $ | 147,953 | $ | 4,258 | ||||||||||
Adjusted MFFO Attributable to CPA®:17 – Global | $ | 51,795 | $ | 50,325 | $ | 1,470 | $ | 161,708 | $ | 155,614 | $ | 6,094 |
(a) | We consider MFFO and Adjusted MFFO, which are supplemental measures that are not defined by GAAP, or non-GAAP measures, to be important measures in the evaluation of our results of operations and capital resources. We evaluate our results of operations with a primary focus on the ability to generate cash flow necessary to meet our objective of funding distributions to stockholders. See Supplemental Financial Measures below for our definitions of these non-GAAP measures and reconciliations to their most directly comparable GAAP measures. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||
Existing Net-Leased Properties | |||||||||||||||||||||||
Lease revenues | $ | 74,680 | $ | 74,281 | $ | 399 | $ | 223,742 | $ | 222,382 | $ | 1,360 | |||||||||||
Depreciation and amortization | (20,365 | ) | (20,808 | ) | 443 | (61,096 | ) | (63,093 | ) | 1,997 | |||||||||||||
Property expenses | (3,107 | ) | (2,365 | ) | (742 | ) | (9,547 | ) | (7,676 | ) | (1,871 | ) | |||||||||||
Property level contribution | 51,208 | 51,108 | 100 | 153,099 | 151,613 | 1,486 | |||||||||||||||||
Recently Acquired Net-Leased Properties | |||||||||||||||||||||||
Lease revenues | 10,774 | 8,018 | 2,756 | 31,645 | 14,067 | 17,578 | |||||||||||||||||
Depreciation and amortization | (3,750 | ) | (2,421 | ) | (1,329 | ) | (11,271 | ) | (4,373 | ) | (6,898 | ) | |||||||||||
Property expenses | (7 | ) | (48 | ) | 41 | 168 | (838 | ) | 1,006 | ||||||||||||||
Property level contribution | 7,017 | 5,549 | 1,468 | 20,542 | 8,856 | 11,686 | |||||||||||||||||
Operating Properties (a) | |||||||||||||||||||||||
Operating property revenues | 9,424 | 6,590 | 2,834 | 25,323 | 19,070 | 6,253 | |||||||||||||||||
Operating property expenses | (3,525 | ) | (2,498 | ) | (1,027 | ) | (9,663 | ) | (7,599 | ) | (2,064 | ) | |||||||||||
Depreciation and amortization | (3,512 | ) | (1,260 | ) | (2,252 | ) | (8,069 | ) | (3,836 | ) | (4,233 | ) | |||||||||||
Property level contribution | 2,387 | 2,832 | (445 | ) | 7,591 | 7,635 | (44 | ) | |||||||||||||||
Properties Sold or Held for Sale (b) | |||||||||||||||||||||||
Lease revenues | 4,528 | 1,162 | 3,366 | 6,583 | 3,494 | 3,089 | |||||||||||||||||
Operating property revenues | 1,368 | 6,096 | (4,728 | ) | 11,958 | 17,685 | (5,727 | ) | |||||||||||||||
Operating property expenses | (624 | ) | (2,375 | ) | 1,751 | (4,563 | ) | (6,701 | ) | 2,138 | |||||||||||||
Property expenses | 139 | (348 | ) | 487 | (1,104 | ) | (1,358 | ) | 254 | ||||||||||||||
Depreciation and amortization | (3,617 | ) | (2,355 | ) | (1,262 | ) | (7,123 | ) | (7,373 | ) | 250 | ||||||||||||
Property level contribution | 1,794 | 2,180 | (386 | ) | 5,751 | 5,747 | 4 | ||||||||||||||||
Total Property Level Contribution | |||||||||||||||||||||||
Lease revenues | 89,982 | 83,461 | 6,521 | 261,970 | 239,943 | 22,027 | |||||||||||||||||
Property expenses | (2,975 | ) | (2,761 | ) | (214 | ) | (10,483 | ) | (9,872 | ) | (611 | ) | |||||||||||
Operating property revenues | 10,792 | 12,686 | (1,894 | ) | 37,281 | 36,755 | 526 | ||||||||||||||||
Operating property expenses | (4,149 | ) | (4,873 | ) | 724 | (14,226 | ) | (14,300 | ) | 74 | |||||||||||||
Depreciation and amortization | (31,244 | ) | (26,844 | ) | (4,400 | ) | (87,559 | ) | (78,675 | ) | (8,884 | ) | |||||||||||
Property Level Contribution | 62,406 | 61,669 | 737 | 186,983 | 173,851 | 13,132 | |||||||||||||||||
Add other income: | |||||||||||||||||||||||
Interest income and other | 2,241 | 4,599 | (2,358 | ) | 6,468 | 17,833 | (11,365 | ) | |||||||||||||||
Less other expenses: | |||||||||||||||||||||||
Impairment charges | (29,183 | ) | — | (29,183 | ) | (29,183 | ) | (1,023 | ) | (28,160 | ) | ||||||||||||
Asset management fees | (7,489 | ) | (7,422 | ) | (67 | ) | (22,456 | ) | (21,864 | ) | (592 | ) | |||||||||||
General and administrative | (3,895 | ) | (4,897 | ) | 1,002 | (12,223 | ) | (13,690 | ) | 1,467 | |||||||||||||
Acquisition expenses | (1,446 | ) | — | (1,446 | ) | (6,786 | ) | (643 | ) | (6,143 | ) | ||||||||||||
Other Income and Expenses | |||||||||||||||||||||||
Interest expense | (25,048 | ) | (24,104 | ) | (944 | ) | (75,027 | ) | (69,346 | ) | (5,681 | ) | |||||||||||
Loss on extinguishment of debt | (15,990 | ) | (5 | ) | (15,985 | ) | (23,580 | ) | (275 | ) | (23,305 | ) | |||||||||||
Equity in earnings (losses) of equity method investments in real estate | 2,780 | (1,078 | ) | 3,858 | 6,532 | 6,625 | (93 | ) | |||||||||||||||
Other income and (expenses) | 2,715 | 2,113 | 602 | 7,081 | 3,192 | 3,889 | |||||||||||||||||
Gain on change in control of interests | — | — | — | 49,922 | — | 49,922 | |||||||||||||||||
(35,543 | ) | (23,074 | ) | (12,469 | ) | (35,072 | ) | (59,804 | ) | 24,732 | |||||||||||||
(Loss) income before income taxes and gain on sale of real estate | (12,909 | ) | 30,875 | (43,784 | ) | 87,731 | 94,660 | (6,929 | ) | ||||||||||||||
Provision for income taxes | (2,333 | ) | (1,676 | ) | (657 | ) | (6,530 | ) | (4,441 | ) | (2,089 | ) | |||||||||||
(Loss) income before gain on sale of real estate | (15,242 | ) | 29,199 | (44,441 | ) | 81,201 | 90,219 | (9,018 | ) | ||||||||||||||
Gain on sale of real estate, net of tax | 82,287 | — | 82,287 | 132,702 | 2,197 | 130,505 | |||||||||||||||||
Net Income | 67,045 | 29,199 | 37,846 | 213,903 | 92,416 | 121,487 | |||||||||||||||||
Net income attributable to noncontrolling interests | (8,827 | ) | (9,147 | ) | 320 | (28,404 | ) | (29,345 | ) | 941 | |||||||||||||
Net Income Attributable to CPA®:17 – Global | $ | 58,218 | $ | 20,052 | $ | 38,166 | $ | 185,499 | $ | 63,071 | $ | 122,428 |
(a) | Includes recently acquired self-storage properties. |
(b) | Includes the acceleration of lease intangibles pursuant to the lease termination. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Lessee | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Lease: | ||||||||||||||||
C1000 Logistiek Vastgoed B.V. | $ | 888 | $ | 711 | $ | 2,928 | $ | 2,164 | ||||||||
U-Haul Moving Partners, Inc. and Mercury Partners, LP | 615 | 614 | 1,839 | 1,823 | ||||||||||||
Tesco plc | 87 | 97 | 665 | 444 | ||||||||||||
Berry Plastics Corporation | 417 | 410 | 1,251 | 1,228 | ||||||||||||
Hellweg Die Profi-Baumärkte GmbH & Co. KG (referred to as Hellweg 2) (a) | 163 | 318 | 586 | 1,713 | ||||||||||||
BPS Nevada, LLC | 461 | 392 | 721 | 1,111 | ||||||||||||
State Farm | 186 | 187 | 559 | 595 | ||||||||||||
Eroski Sociedad Cooperativa — Mallorca | 161 | 120 | 500 | 453 | ||||||||||||
Bank Pekao S.A. | 171 | 188 | 516 | 553 | ||||||||||||
Agrokor d.d. (referred to as Agrokor 5) | 83 | 182 | 227 | 202 | ||||||||||||
Dick’s Sporting Goods, Inc. | 32 | 29 | 94 | 85 | ||||||||||||
Apply Sørco AS | 125 | 11 | 176 | 129 | ||||||||||||
3,389 | 3,259 | 10,062 | 10,500 | |||||||||||||
Self-Storage: | ||||||||||||||||
Madison Storage NYC, LLC and Veritas Group IX-NYC, LLC (b) | — | (403 | ) | (433 | ) | (1,427 | ) | |||||||||
— | (403 | ) | (433 | ) | (1,427 | ) | ||||||||||
All Other: | ||||||||||||||||
IDL Wheel Tenant, LLC (c) | 1,154 | (59 | ) | (2,336 | ) | (59 | ) | |||||||||
BG LLH, LLC (d) | 91 | (1,398 | ) | (779 | ) | (2,864 | ) | |||||||||
Shelborne Property Associates, LLC (e) | (2,657 | ) | (3,234 | ) | (2,373 | ) | (1,392 | ) | ||||||||
BPS Nevada, LLC - Preferred Equity | 803 | 757 | 2,391 | 1,867 | ||||||||||||
(609 | ) | (3,934 | ) | (3,097 | ) | (2,448 | ) | |||||||||
Total equity in earnings (losses) of equity method investments in real estate | $ | 2,780 | $ | (1,078 | ) | $ | 6,532 | $ | 6,625 |
(a) | The decrease in income primarily relates to the recognition of tax benefits as an outcome of the tax audits for the prior years. The lower tax assessments for 2013 led to a tax benefit adjustment during the three months ended March 31, 2015. |
(b) | In April 2016, we purchased the remaining 15% controlling interest in this equity investment and therefore consolidated this investment since the date of purchase (Note 4). |
(c) | This build-to-suit investment was placed into service in May 2015. For the three months ended September 30, 2016 we recognized equity investment income as a result of the contribution of capital from other partners. For the nine months ended September 30, 2016, this investment operated at the loss. |
(d) | During the three and nine months ended September 30, 2016, the change was driven primarily by an increase in operating income related to increased profitability and margins. Additionally, during the three months ended September 30, 2016, this equity investment recognized a gain on sale related to two dispositions. |
(e) | Variances between the three and nine months ended September 30, 2016 and the comparable periods in 2015 were primarily due to timing of capital contributions from our partners to partially fund cumulative losses that had previously been recognized on our investment as a result of applying the hypothetical liquidation book value model. |
September 30, 2016 | December 31, 2015 (a) | ||||||
Carrying Value | |||||||
Fixed rate | $ | 1,281,818 | $ | 1,301,875 | |||
Variable rate: | |||||||
Senior Credit Facility - Term Loan | 49,719 | — | |||||
Senior Credit Facility - Revolver | — | 112,834 | |||||
Non-recourse debt: | |||||||
Amount subject to interest rate swaps and caps | 437,830 | 412,074 | |||||
Floating interest rate mortgage loans | 297,829 | 167,825 | |||||
735,659 | 579,899 | ||||||
$ | 2,067,196 | $ | 1,994,608 | ||||
Percent of Total Debt | |||||||
Fixed rate | 62 | % | 65 | % | |||
Variable rate | 38 | % | 35 | % | |||
100 | % | 100 | % | ||||
Weighted-Average Interest Rate at End of Period | |||||||
Fixed rate | 5.0 | % | 5.1 | % | |||
Variable rate (b) | 3.5 | % | 3.5 | % |
(a) | In accordance with ASU 2015-03, we reclassified deferred financing costs from Other assets, net to Non-recourse debt, net and the Term Loan included in Senior Unsecured Credit Facility, net as of December 31, 2015 (Note 2). |
(b) | The impact of our derivative instruments is reflected in the weighted-average interest rates. |
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Non-recourse debt — principal (a) (b) | $ | 2,031,744 | $ | 460,358 | $ | 364,196 | $ | 422,965 | $ | 784,225 | |||||||||
Senior Credit Facility - Term Loan — principal (c) | 50,000 | — | 50,000 | — | — | ||||||||||||||
Deferred acquisition fees — principal | 5,087 | 3,471 | 1,616 | — | — | ||||||||||||||
Interest on borrowings and deferred acquisition fees | 350,983 | 79,753 | 118,994 | 93,597 | 58,639 | ||||||||||||||
Capital commitments (d) | 10,019 | 10,019 | — | — | — | ||||||||||||||
Operating and other lease commitments (e) | 75,044 | 2,888 | 5,940 | 4,761 | 61,455 | ||||||||||||||
Asset retirement obligations, net (f) | 17,602 | — | — | — | 17,602 | ||||||||||||||
$ | 2,540,479 | $ | 556,489 | $ | 540,746 | $ | 521,323 | $ | 921,921 |
(a) | Excludes deferred financing costs totaling $10.2 million and unamortized discount, net of $4.1 million on 11 notes, which were included in Non-recourse debt at September 30, 2016. |
(b) | Includes $180.6 million of debt that matured on September 28, 2016, however, we are in negotiations with the same lenders to refinance the outstanding debt, which is expected to occur before December 31, 2016. |
(c) | Excludes deferred financing costs totaling $0.2 million and unamortized discount of less than $0.1 million on our Senior Credit Facility, which is scheduled to mature on August 26, 2018, unless extended by us pursuant to its terms. |
(d) | Capital commitments include (i) construction commitments related to build-to-suit projects placed in service of $9.7 million (Note 4), and (ii) $0.3 million related to unfunded tenant improvements. |
(e) | Operating commitments consist of rental obligations under ground leases. Other lease commitments consist of our estimated share of future rents payable for the purpose of leasing office space pursuant to the advisory agreement. Amounts are estimated based on current allocation percentages among WPC and the other Managed Programs as of September 30, 2016 (Note 3). |
(f) | Represents the estimated amount of future obligations estimated for the removal of asbestos and environmental waste in connection with several of our investments, payable upon the retirement or sale of the assets. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to CPA®:17 – Global | $ | 58,218 | $ | 20,052 | $ | 185,499 | $ | 63,071 | |||||||
Adjustments: | |||||||||||||||
Gain on sale of real estate | (82,287 | ) | — | (132,702 | ) | (2,197 | ) | ||||||||
Depreciation and amortization of real property | 31,279 | 26,785 | 87,657 | 78,503 | |||||||||||
Impairment charges | 29,183 | — | 29,183 | — | |||||||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at FFO: | |||||||||||||||
Depreciation and amortization of real property | 8,262 | 8,059 | 26,181 | 23,599 | |||||||||||
Gain on sale of real estate | (801 | ) | — | (801 | ) | — | |||||||||
Proportionate share of adjustments for noncontrolling interests to arrive at FFO | (144 | ) | (137 | ) | (431 | ) | (423 | ) | |||||||
Total adjustments | (14,508 | ) | 34,707 | 9,087 | 99,482 | ||||||||||
FFO attributable to CPA®:17 – Global — as defined by NAREIT | 43,710 | 54,759 | 194,586 | 162,553 | |||||||||||
Adjustments: | |||||||||||||||
Loss on extinguishment of debt | 15,990 | 5 | 23,580 | 275 | |||||||||||
Straight-line and other rent adjustments (a) | (4,384 | ) | (5,445 | ) | (14,833 | ) | (15,285 | ) | |||||||
Above- and below-market rent intangible lease amortization, net (b) | (4,092 | ) | (361 | ) | (4,324 | ) | (1,054 | ) | |||||||
Realized gains on foreign currency, derivatives and other | (2,006 | ) | (944 | ) | (6,445 | ) | (5,285 | ) | |||||||
Merger and acquisition expenses (c) | 1,446 | — | 6,786 | 643 | |||||||||||
Unrealized (gains) losses on foreign currency, derivatives, and other | (722 | ) | (918 | ) | (676 | ) | 2,963 | ||||||||
Amortization of premiums on debt investments, net | 613 | 259 | 1,516 | 340 | |||||||||||
Gain on change in control of interests (d) | — | — | (49,922 | ) | — | ||||||||||
Impairment charges (e) | — | — | — | 1,023 | |||||||||||
Proportionate share of adjustments to equity in net income of partially-owned entities to arrive at MFFO: | |||||||||||||||
Realized (gains) losses on foreign currency, derivatives, and other | (3,305 | ) | (133 | ) | 183 | 164 | |||||||||
Above- and below-market rent intangible lease amortization, net (b) | 321 | 334 | 1,020 | 706 | |||||||||||
Acquisition expenses (c) | 160 | 205 | (975 | ) | 541 | ||||||||||
Unrealized losses on foreign currency, derivatives, and other | 85 | — | 438 | — | |||||||||||
Straight-line and other rent adjustments (a) | (25 | ) | (64 | ) | (100 | ) | (205 | ) | |||||||
Amortization of premiums on debt investments, net | 11 | 95 | 106 | 284 | |||||||||||
Loss on extinguishment of debt | — | — | 978 | — | |||||||||||
Proportionate share of adjustments for noncontrolling interests to arrive at MFFO | 84 | 116 | 293 | 290 | |||||||||||
Total adjustments | 4,176 | (6,851 | ) | (42,375 | ) | (14,600 | ) | ||||||||
MFFO attributable to CPA®:17 – Global | 47,886 | 47,908 | 152,211 | 147,953 | |||||||||||
Adjustments: | |||||||||||||||
Hedging gains | 2,172 | 2,288 | 5,850 | 7,330 | |||||||||||
Deferred taxes | 1,737 | 129 | 3,647 | 331 | |||||||||||
Total adjustments | 3,909 | 2,417 | 9,497 | 7,661 | |||||||||||
Adjusted MFFO attributable to CPA®:17 – Global | $ | 51,795 | $ | 50,325 | $ | 161,708 | $ | 155,614 |
(a) | Under GAAP, rental receipts are allocated to periods using an accrual basis. This may result in timing of income recognition that is significantly different than underlying contract terms. By adjusting for these items (to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), management believes that MFFO and Adjusted MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments, provides insight on the contractual cash flows of such lease terms and debt investments, and aligns results with management’s analysis of operating performance. |
(b) | Under GAAP, certain intangibles are accounted for at cost and reviewed at least annually for impairment and certain intangibles are assumed to diminish predictably in value over time and amortized, similar to depreciation and amortization of other real estate related assets that are excluded from FFO. However, because real estate values and market lease rates historically rise or fall with market conditions, management believes that, by excluding charges relating to amortization of these intangibles, MFFO and Adjusted MFFO provides useful supplemental information on the performance of the real estate. |
(c) | In evaluating investments in real estate, management differentiates the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for non-listed REITs that have completed their acquisition activity and have other similar operating characteristics. By excluding expensed acquisition costs, management believes MFFO and Adjusted MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition fees and expenses include payments to our Advisor or third parties. Acquisition fees and expenses under GAAP are considered operating expenses and as expenses included in the determination of net income, a performance measure under GAAP. All paid and accrued acquisition fees and expenses will have negative effects on returns to stockholders, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property. |
(d) | Gain on change in control of interests for the nine months ended September 30, 2016 represents a gain recognized on our acquisition of a 15% controlling interest in five self-storage properties, which we had previously accounted for as an equity method investment (Note 4). |
(e) | Impairment charges were incurred on our CMBS portfolio and are considered non-real estate impairments. As such, these impairment charges were not included as an add back adjustment in our computation of FFO, as defined by NAREIT, but are included as an adjustment in arriving at MFFO and Adjusted MFFO because these charges are not directly related or attributable to our operations. |
2016 (Remainder) | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | Fair value | ||||||||||||||||||||||||
Fixed-rate debt (a) | $ | 17,051 | $ | 247,856 | $ | 57,954 | $ | 29,334 | $ | 138,248 | $ | 799,047 | $ | 1,289,490 | $ | 1,329,600 | |||||||||||||||
Variable-rate debt (a) (b) | $ | 182,480 | $ | 170,937 | $ | 170,306 | $ | 4,245 | $ | 4,541 | $ | 259,745 | $ | 792,254 | $ | 790,040 |
(a) | Amounts are based on the exchange rate at September 30, 2016, as applicable. |
(b) | Includes the $50.0 million delayed draw of our Term Loan, which is scheduled to mature on August 26, 2018, unless extended by us pursuant to its terms. |
Lease Revenues (a) | 2016 (Remainder) | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | |||||||||||||||||||||
Euro (b) | $ | 26,151 | $ | 103,857 | $ | 104,018 | $ | 104,182 | $ | 104,635 | $ | 836,289 | $ | 1,279,132 | ||||||||||||||
British pound sterling (c) | 1,267 | 5,025 | 5,025 | 5,025 | 5,039 | 50,154 | 71,535 | |||||||||||||||||||||
Japanese yen (d) | 785 | 3,113 | 3,113 | 3,113 | 3,122 | 3,864 | 17,110 | |||||||||||||||||||||
$ | 28,203 | $ | 111,995 | $ | 112,156 | $ | 112,320 | $ | 112,796 | $ | 890,307 | $ | 1,367,777 |
Debt Service (a) (e) | 2016 (Remainder) | 2017 | 2018 | 2019 | 2020 | Thereafter | Total | |||||||||||||||||||||
Euro (b) | $ | 198,981 | $ | 132,523 | $ | 14,297 | $ | 11,441 | $ | 76,288 | $ | 199,614 | $ | 633,144 | ||||||||||||||
British pound sterling (c) | 398 | 1,607 | 1,574 | 12,043 | 311 | 16,817 | 32,750 | |||||||||||||||||||||
Japanese yen (d) | 129 | 26,223 | — | — | — | — | 26,352 | |||||||||||||||||||||
$ | 199,508 | $ | 160,353 | $ | 15,871 | $ | 23,484 | $ | 76,599 | $ | 216,431 | $ | 692,246 |
(a) | Amounts are based on the applicable exchange rates at September 30, 2016. Contractual rents and debt obligations are denominated in the functional currency of the country of each property. Our foreign operations denominated in the Norwegian krone and Indian rupee are related to an unconsolidated jointly-owned investment and a foreign debenture, respectively, and are excluded from the amounts in the tables. |
(b) | We estimate that, for a 1% increase or decrease in the exchange rate between the euro and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow at September 30, 2016 of $6.5 million. |
(c) | We estimate that, for a 1% increase or decrease in the exchange rate between the British pound sterling and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow at September 30, 2016 of $0.4 million. |
(d) | We estimate that, for a 1% increase or decrease in the exchange rate between the Japanese yen and the U.S. dollar, there would be a corresponding change in the projected estimated property-level cash flow at September 30, 2016 of less than $0.1 million. |
(e) | Interest on unhedged variable-rate debt obligations was calculated using the applicable annual interest rates and balances outstanding at September 30, 2016. |
• | 73% related to domestic properties, which included a concentration in Texas of 14%, and |
• | 27% related to international properties. |
• | 66% related to domestic properties; |
• | 34% related to international properties; |
• | 32% related to office facilities, 24% related to retail facilities, 23% related to warehouse facilities, and 16% related to industrial facilities; and |
• | 27% related to the retail stores industry and 12% related to the business services industry. |
Total number of shares purchased (a) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or program (a) | Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or program (a) | ||||||||
2016 Period | |||||||||||
July | 117 | $ | 9.56 | N/A | N/A | ||||||
August | — | — | N/A | N/A | |||||||
September | 1,122,750 | 9.57 | N/A | N/A | |||||||
Total | 1,122,867 |
(a) | Represents shares of our common stock repurchased under our redemption plan, pursuant to which we may elect to redeem shares at the request of our stockholders subject to certain exceptions, conditions, and limitations. The maximum amount of shares purchasable by us in any period depends on a number of factors and is at the discretion of our board of directors. We generally receive fees in connection with share redemptions. During the three months ended September 30, 2016, we received 308 redemption requests for common stock, which were satisfied during that period. |
Exhibit No. | Description | Method of Filing | |||
3.1 | Amended and Restated Bylaws of Corporate Property Associates 17 – Global Incorporated | Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on August 23, 2016 | |||
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
32 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
101 | The following materials from Corporate Property Associates 17 – Global Incorporated’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015, (iv) Consolidated Statements of Equity for the nine months ended September 30, 2016 and 2015, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements. | Filed herewith |
Corporate Property Associates 17 – Global Incorporated | |||
Date: | November 9, 2016 | ||
By: | /s/ ToniAnn Sanzone | ||
ToniAnn Sanzone | |||
Chief Financial Officer | |||
(Principal Financial Officer) | |||
Date: | November 9, 2016 | ||
By: | /s/ Kristin Sabia | ||
Kristin Sabia | |||
Chief Accounting Officer | |||
(Principal Accounting Officer) |
Exhibit No. | Description | Method of Filing | |||
3.1 | Amended and Restated Bylaws of Corporate Property Associates 17 – Global Incorporated | Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on August 23, 2016 | |||
31.1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
31.2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |||
32 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith |
101 | The following materials from Corporate Property Associates 17 – Global Incorporated’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Income for the three and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015, (iv) Consolidated Statements of Equity for the nine months ended September 30, 2016 and 2015, (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements. | Filed herewith |
1. | I have reviewed this Quarterly Report on Form 10-Q of Corporate Property Associates 17 – Global Incorporated; |
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 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 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. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Corporate Property Associates 17 – Global Incorporated; |
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 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 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. |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Corporate Property Associates 17 – Global Incorporated. |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 31, 2016 |
|
Document Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001390213 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Registrant Name | Corporate Property Associates 17 - Global INC | |
Entity Common Stock Shares Outstanding | 345,373,859 |
Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
CPA®:17 – Global stockholders’ equity: | ||
Common stock, par or stated value per share | $ 0.001 | $ 0.001 |
Common stock shares authorized | 900,000,000 | 900,000,000 |
Common stock shares outstanding | 342,748,756 | 337,065,419 |
Preferred stock, par or stated value per share | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 50,000,000 | 50,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Consolidated Statements of Income (Unaudited) (Parentheticals) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Available Cash Distributions | $ 5,276 | $ 5,837 | $ 17,803 | $ 17,690 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 67,045 | $ 29,199 | $ 213,903 | $ 92,416 |
Other Comprehensive Income (Loss) | ||||
Foreign currency translation adjustments | 3,707 | (1,100) | 15,442 | (60,990) |
Change in net unrealized (loss) gain on derivative instruments | (2,392) | (3,142) | (9,997) | 15,665 |
Change in unrealized gain on marketable securities | 8 | 7 | 22 | 21 |
Total other comprehensive loss | 1,323 | (4,235) | 5,467 | (45,304) |
Comprehensive Income | 68,368 | 24,964 | 219,370 | 47,112 |
Amounts Attributable to Noncontrolling Interests | ||||
Net income | (8,827) | (9,147) | (28,404) | (29,345) |
Foreign currency translation adjustments | (108) | (103) | (548) | 631 |
Comprehensive income attributable to noncontrolling interests | (8,935) | (9,250) | (28,952) | (28,714) |
Comprehensive Income Attributable to CPA:17 - Global | $ 59,433 | $ 15,714 | $ 190,418 | $ 18,398 |
Consolidated Statements of Equity (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Stock Transactions, Parenthetical Disclosures [Abstract] | ||||
Distributions Declared Per Share (usd per share) | $ 0.1625 | $ 0.1625 | $ 0.4875 | $ 0.4875 |
Organization |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Corporate Property Associates 17 – Global Incorporated, or CPA®:17 – Global, and, together with its consolidated subsidiaries, we, us, or our, is a publicly owned, non-listed real estate investment trust, or REIT, that invests primarily in commercial real estate properties leased to companies both domestically and internationally. We were formed in 2007 and are managed by W. P. Carey Inc., or WPC, through one of its subsidiaries, or collectively our Advisor. As a REIT, we are not subject to U.S. federal income taxation as long as we satisfy certain requirements, principally relating to the nature of our income and the level of our distributions, among other factors. We earn revenue primarily by leasing the properties we own to single corporate tenants, predominantly on a triple-net lease basis, which requires the tenant to pay substantially all of the costs associated with operating and maintaining the property. Revenue is subject to fluctuation due to the timing of new lease transactions, lease terminations, lease expirations, contractual rent adjustments, tenant defaults, sales of properties, and changes in foreign currency exchange rates. Substantially all of our assets and liabilities are held by CPA®:17 Limited Partnership, or the Operating Partnership, and at September 30, 2016, we owned 99.99% of general and limited partnership interests in the Operating Partnership. The remaining interest in the Operating Partnership is held by a subsidiary of WPC. At September 30, 2016, our portfolio was comprised of full or partial ownership interests in 388 fully-occupied properties, substantially all of which were triple-net leased to 116 tenants, and totaled approximately 42 million square feet. In addition, our portfolio was comprised of full or partial ownership interests in 38 operating properties, including 37 self-storage properties and one hotel property, for an aggregate of approximately 3 million square feet. As opportunities arise, we may also make other types of commercial real estate-related investments. We operate in two reportable business segments: Net Lease and Self-Storage. Our Net Lease segment includes our domestic and foreign investments in net-leased properties, whether they are accounted for as operating leases or direct financing leases. Our Self-Storage segment is comprised of our investments in self-storage properties. In addition, we have investments in loans receivable, commercial mortgage-backed securities, or CMBS, one hotel, and other properties, which are included in our All Other category (Note 14). |
Basis of Presentation |
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Basis of Presentation | Basis of Presentation Basis of Presentation Our interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a fair statement of our consolidated financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States, or GAAP. In the opinion of management, the unaudited financial information for the interim periods presented in this Report reflects all normal and recurring adjustments necessary for a fair statement of financial position, results of operations, and cash flows. Our interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the year ended December 31, 2015, which are included in the 2015 Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this Report. Operating results for interim periods are not necessarily indicative of operating results for an entire year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Basis of Consolidation Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries and our tenancy-in-common interest, as described below. The portions of equity in consolidated subsidiaries that are not attributable, directly or indirectly, to us are presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated. On January 1, 2016, we adopted the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Update, or ASU, 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, as described in the Recent Accounting Pronouncements section below, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities that operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We performed this analysis on all of our subsidiary entities following the guidance in ASU 2015-02 to determine whether they qualify as VIEs and whether they should be consolidated or accounted for as equity investments in an unconsolidated venture. As part of this change in guidance, we determined that 15 entities that were previously classified as voting interest entities should now be classified as VIEs as of January 1, 2016 and therefore included in our VIE disclosures. However, there was no change in determining whether or not we consolidate these entities as a result of the new guidance. We elected to retrospectively adopt ASU 2015-02, which resulted in changes to our VIE disclosures within the consolidated balance sheets. There were no other changes to our consolidated balance sheets or results of operations for the periods presented. The liabilities of these VIEs are non-recourse to us and can only be satisfied from each VIE’s respective assets. At September 30, 2016, we considered 29 entities VIEs, 14 of which we consolidated as we are considered the primary beneficiary and two of which we accounted for as loans receivable. The following table presents a summary of selected financial data of the consolidated VIEs, included in the consolidated balance sheets (in thousands):
At September 30, 2016 and December 31, 2015 we had 13 and 14 unconsolidated VIEs, respectively, all of which we account for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence but does not give us power over decisions that significantly affect the economic performance of these entities. As of September 30, 2016 and December 31, 2015, the carrying amount of our investments in these entities was $396.6 million, and $432.6 million, respectively, and our maximum exposure to loss in these entities was limited to our investments in the entities. At September 30, 2016, we had an investment in a tenancy-in-common interest in various international properties. Consolidation of this investment is not required as such interest does not qualify as a VIE and does not meet the control requirement for consolidation. Accordingly, we account for this investment using the equity method of accounting. We use the equity method of accounting because the shared decision-making involved in a tenancy-in-common interest investment provides us with significant influence on the operating and financial decisions of this investment. At times, the carrying value of our equity investments may fall below zero for certain investments. We intend to fund our share of the jointly-owned investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. At September 30, 2016, none of our equity investments had carrying values below zero. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. During the year ended December 31, 2015, we determined that our presentation of common shares repurchased should be classified as a reduction to Common stock, for the par amount of the common shares repurchase and as a reduction to Additional paid-in capital for the excess over the amount allocated to common stock, as well as included as shares unissued within the consolidated financial statements. We previously classified common shares repurchased as Treasury stock in our consolidated financial statements. We repurchased 1,826,959 shares from inception through December 31, 2011, 1,818,685 shares in 2012, 1,918,540 shares in 2013, 2,798,365 shares in 2014, and 3,089,139 shares in the nine-month period ended September 30, 2015. We evaluated the impact of this correction on previously-issued financial statements and concluded that they were not materially misstated. In order to conform previously-issued financial statements to the current period, we elected to revise previously-issued financial statements the next time such financial statements are filed. The correction eliminates Treasury stock of $106.2 million as of September 30, 2015 and results in corresponding reductions of Common stock and Additional paid-in capital, but has no impact on total equity within the consolidated balance sheets as of September 30, 2015 and consolidated statements of equity for the nine months ended September 30, 2015. The consolidated statement of equity for the nine months ended September 30, 2015 has been revised accordingly. The misclassification had no impact on the previously-reported consolidated statements of income, consolidated statements of comprehensive income, or condensed consolidated statements of cash flows. On January 1, 2016, we adopted ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30) as described in the Recent Accounting Pronouncements section below. ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. As a result of adopting this guidance, we reclassified $12.8 million of deferred financing costs, net from Other assets, net to Non-recourse debt, net and Senior Credit Facility, net as of December 31, 2015. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, but will apply to reimbursed tenant costs and revenues generated from our operating properties. Additionally, this guidance modifies disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for all entities by one year, beginning in 2018, with early adoption permitted but not before 2017, the original public company effective date. We are currently evaluating the impact of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). ASU 2015-02 amends the current consolidation guidance, including modification of the guidance for evaluating whether limited partnerships and similar legal entities are VIEs or voting interest entities. The guidance does not amend the existing disclosure requirements for VIEs or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, ASU 2015-02 requires an entity to classify a limited liability company or a limited partnership as a VIE unless the partnership provides partners with either substantive kick-out rights or substantive participating rights over the managing member or general partner. Please refer to the discussion in the Basis of Consolidation section above. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not affect the recognition and measurement guidance for debt issuance costs. ASU 2015-03 is effective for periods beginning after December 15, 2015, and retrospective application is required. We adopted ASU 2015-03 on January 1, 2016 and have disclosed the reclassification of our debt issuance costs in the Reclassifications section above. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, early adoption is permitted and prospective application is required for adjustments that are identified after the effective date of this update. We elected to early adopt ASU 2015-16 and implemented the standard prospectively beginning July 1, 2015. The adoption and implementation of the standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a new model for accounting by lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, with the distinction between operating and financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new standard also replaces existing sale-leaseback guidance with a new model applicable to both lessees and lessors. Additionally, the new standard requires extensive quantitative and qualitative disclosures. ASU 2016-02 is effective for U.S. GAAP public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; for all other entities, the final lease standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application will be permitted for all entities. The new standard must be adopted using a modified retrospective transition of the new guidance and provides for certain practical expedients. Transition will require application of the new model at the beginning of the earliest comparative period presented. We are evaluating the impact of the new standard and have not yet determined if it will have a material impact on our business or our consolidated financial statements. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. ASU 2016-05 clarifies that a change in counterparty to a derivative contract in and of itself, does not require the dedesignation of a hedging relationship. ASU 2016-05 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted and entities have the option of adopting this guidance on a prospective basis to new derivative contracts or on a modified retrospective basis. We elected to early adopt ASU 2016-05 on January 1, 2016 on a prospective basis and there was no impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323). ASU 2016-07 simplifies the transition to the equity method of accounting. ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead the equity method of accounting will be applied prospectively from the date significant influence is obtained. The new standard should be applied prospectively for investments that qualify for the equity method of accounting in interim and annual periods beginning after December 15, 2016. Early adoption is permitted and we elected to early adopt this standard as of January 1, 2016. The adoption of this standard had no impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. ASU 2016-13 will be effective for public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 intends to reduce diversity in practice for certain cash flow classifications, including, but not limited to (i) debt prepayment or debt extinguishment costs, (ii) contingent consideration payments made after a business combination, (iii) proceeds from the settlement of insurance claims, and (iv) distributions received from equity method investees. ASU 2016-15 will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-15 on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. ASU 2016-17 changes how a reporting entity that is a decision maker should consider indirect interests in a VIE held through an entity under common control. If a decision maker must evaluate whether it is the primary beneficiary of a VIE, it will only need to consider its proportionate indirect interest in the VIE held through a common control party. ASU 2016-17 amends ASU 2015-02, which we adopted on January 1, 2016, and which currently directs the decision maker to treat the common control party’s interest in the VIE as if the decision maker held the interest itself. ASU 2016-17 will be effective for public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2016-17 on our consolidated financial statements. |
Agreements and Transactions with Related Parties |
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Agreements and Transactions with Related Parties | Agreements and Transactions with Related Parties Transactions with Our Advisor We have an advisory agreement with our Advisor whereby our Advisor performs certain services for us under a fee arrangement, including the identification, evaluation, negotiation, purchase, and disposition of real estate and related assets and mortgage loans; day-to-day management; and the performance of certain administrative duties. We also reimburse our Advisor for general and administrative duties performed on our behalf. The advisory agreement has a term of one year and may be renewed for successive one-year periods. We may terminate the advisory agreement upon 60 days’ written notice without cause or penalty. The following tables present a summary of fees we paid, expenses we reimbursed, and distributions we made to our Advisor and other affiliates in accordance with the relevant agreements (in thousands):
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The following table presents a summary of amounts included in Due to affiliates in the consolidated financial statements (in thousands):
Acquisition and Disposition Fees We pay our Advisor acquisition fees for structuring and negotiating investments and related mortgage financing on our behalf, a portion of which is payable upon acquisition of investments, with the remainder subordinated to the achievement of a preferred return, which is a non-compounded cumulative distribution of 5.0% per annum (based initially on our invested capital). Acquisition fees payable to our Advisor with respect to our long-term, net-lease investments are 4.5% of the total cost of those investments and are comprised of (i) a current portion of 2.5%, typically paid upon acquisition, and (ii) a deferred portion of 2.0%, typically paid over three years and subject to the 5.0% preferred return described above. The preferred return was achieved as of each of the cumulative periods from inception through September 30, 2016 and December 31, 2015. For certain types of non-long term net-lease investments, initial acquisition fees are between 1.0% and 1.75% of the equity invested plus the related acquisition fees, with no portion of the payment being deferred. Unpaid installments of deferred acquisition fees are included in Due to affiliates in the consolidated financial statements. Unpaid installments of deferred acquisition fees bear interest at an annual rate of 5.0%. Our Advisor may be entitled to receive a disposition fee equal to the lesser of (i) 50.0% of the competitive real estate commission (as defined in the advisory agreement) or (ii) 3.0% of the contract sales price of the investment being sold; however, payment of such fees is subordinated to the 5.0% preferred return. These fees are payable at the discretion of our board of directors. Asset Management Fees and Available Cash Distribution As described in the advisory agreement, we pay our Advisor asset management fees that vary based on the nature of the underlying investment. We pay 0.5% per annum of average market value for long-term net leases and certain other types of real estate investments, and 1.5% to 1.75% per annum of average equity value for certain types of securities. Asset management fees are payable in cash and/or shares of our common stock at our option, after consultation with our Advisor. If our Advisor receives all or a portion of its fees in shares, the number of shares issued is determined by dividing the dollar amount of fees by our most recently published estimated net asset value per share, or NAV, which was $10.24 as of December 31, 2015. For the nine months ended September 30, 2016, we paid our Advisor 50.0% of its asset management fees in cash and 50.0% in shares of our common stock. At September 30, 2016, our Advisor owned 11,510,492 shares, or 3.4%, of our common stock. We also distribute to our Advisor, depending on the type of investments we own, up to 10.0% of the available cash of the Operating Partnership, referred to as the Available Cash Distribution, which is defined as cash generated from operations, excluding capital proceeds, as reduced by operating expenses and debt service, excluding prepayments and balloon payments. Asset management fees and Available Cash Distributions are included in Property expenses and Net income attributable to noncontrolling interests, respectively, in the consolidated financial statements. Personnel and Overhead Reimbursements Under the terms of the advisory agreement, our Advisor allocates a portion of its personnel and overhead expenses to us and the other non-listed REITs or other entities that are managed by our Advisor, including Corporate Property Associates 18 – Global Incorporated, or CPA®:18 – Global; Carey Watermark Investors Incorporated, or CWI 1; Carey Watermark Investors 2 Incorporated, or CWI 2; Carey Credit Income Fund, or CCIF; and Carey European Student Housing Fund I, L.P., or CESH I; collectively referred to herein as the Managed Programs. Our Advisor allocates these expenses to us on the basis of our trailing four quarters of reported revenues in comparison to those of WPC and other entities managed by WPC and its affiliates. We reimburse our Advisor for various expenses it incurs in the course of providing services to us. We reimburse certain third-party expenses paid by our Advisor on our behalf, including property-specific costs, professional fees, office expenses, and business development expenses. In addition, we reimburse our Advisor for the allocated costs of personnel and overhead in managing our day-to-day operations, including accounting services, stockholder services, corporate management, and property management and operations. We do not reimburse our Advisor for the cost of personnel if these personnel provide services for transactions for which our Advisor receives a transaction fee, such as for acquisitions and dispositions. Under the advisory agreement currently in place, the amount of applicable personnel costs allocated to us is capped at 2.4% for 2015 and 2.2% for 2016 of pro rata lease revenues for each year. Beginning in 2017, the cap decreases to 2.0% of pro rata lease revenues for that year. Costs related to our Advisor’s legal transactions group are based on a schedule of expenses relating to services performed for different types of transactions, such as financings, lease amendments, and dispositions, among other categories, and includes 0.25% of the total investment cost of an acquisition. In general, personnel and overhead reimbursements are included in General and administrative expenses in the consolidated financial statements. However, we capitalize certain of the costs related to our Advisor’s legal transactions group if the costs relate to a transaction that is not considered to be a business combination. Excess Operating Expenses Our Advisor is obligated to reimburse us for the amount by which our operating expenses exceeds the “2%/25% guidelines” (the greater of 2% of average invested assets or 25% of net income) as defined in the advisory agreement for any 12-month period, subject to certain conditions. Our operating expenses have not exceeded the amount that would require our Advisor to reimburse us. Loans from WPC In March 2015, our board of directors and the board of directors of WPC approved unsecured loans from WPC to us of up to $75.0 million, in the aggregate, at a rate equal to the rate at which WPC was able to borrow funds under its line of credit, for the purpose of facilitating acquisitions approved by our Advisor’s investment committee that we would not otherwise have had sufficient available funds to complete. All loans were made solely at the discretion of WPC’s management. The WPC line of credit was terminated in August 2015 once we entered into the Senior Credit Facility (Note 10). Jointly-Owned Investments and Other Transactions with Affiliates At September 30, 2016, we owned interests ranging from 7% to 97% in jointly-owned investments, with the remaining interests held by affiliates or by third parties. We consolidate certain of these investments and account for the remainder under the equity method of accounting. We also owned an interest in a jointly-controlled tenancy-in-common interest in several properties, which we account for under the equity method of accounting (Note 6). |
Net Investments in Properties and Real Estate Under Construction |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Investments in Properties and Real Estate Under Construction | Net Investments in Properties and Real Estate Under Construction Real Estate Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):
The carrying value of our real estate increased $25.2 million from December 31, 2015 to September 30, 2016, due to the weakening of the U.S. dollar relative to foreign currencies, particularly the euro, partially offset by the strengthening of the U.S. dollar relative to the British pound sterling, during the period. Acquisitions of Real Estate During 2016 During the nine months ended September 30, 2016, we acquired the following investments, which were deemed to be business combinations because we assumed the existing leases on the properties, at a total cost of $51.2 million, including land of $6.7 million, buildings of $40.2 million, and net lease intangibles of $4.3 million (Note 7):
In connection with these investments, we expensed acquisition-related costs and fees totaling $2.6 million, which are included in Acquisition expenses in the consolidated financial statements. During the nine months ended September 30, 2016, we capitalized $4.3 million of building improvements with existing tenants of our net-leased properties. Operating Real Estate Operating real estate, which consists of our domestic self-storage operations, at cost, is summarized as follows (in thousands):
During the nine months ended September 30, 2016, we capitalized $1.0 million of building improvements related to our operating properties. Acquisitions of Operating Real Estate During 2016 In 2013, we acquired a 45% equity interest and 40% indirect economic interest in Madison Storage NYC, LLC and Veritas Group IX-NYC, LLC, both of which are VIEs and were previously accounted for under the equity method of accounting and included in Equity investments in real estate in the consolidated financial statements. On April 11, 2016, we acquired the remaining 15% controlling interest in these entities at a total cost of $22.0 million and, as a result, now have 100% of the economic interest and consolidate this investment. In connection with this business combination, we expensed acquisition-related costs and fees of $3.7 million, which are included in Acquisition expenses in the consolidated financial statements. Due to the change in control resulting from the acquisition of this controlling interest, we accounted for this acquisition utilizing the purchase method of accounting. We recorded a non-cash gain on change in control of interest of $49.9 million during the nine months ended September 30, 2016, which was the difference between the carrying value and the fair value of our previously held equity interest on April 11, 2016. The following tables present a summary of assets acquired and liabilities assumed, and revenues and earnings thereon since the respective date of acquisition through September 30, 2016 (in thousands):
___________ (a) The purchase price for this transaction was allocated to the assets acquired and liabilities assumed based upon its preliminary fair value. The information in this table is based on the best estimates of management as of the date of this Report. We are in the process of finalizing our assessment of the fair value of the assets acquired and liabilities assumed. Accordingly, the fair value of the assets acquired and liabilities assumed are subject to change. (b) Includes a $49.9 million gain on change in control of interests. (c) Includes equity in earnings of equity method investments in real estate of $0.4 million. Pro Forma Financial Information The following consolidated pro forma financial information presents our financial results as if this business combination had occurred as of January 1, 2015. The pro forma financial information is not necessarily indicative of what the actual results would have been had the acquisition actually occurred on January 1, 2015, nor does it purport to represent the results of operations for future periods (in thousands).
___________ (a) Pro forma net income for the nine months ended September 30, 2015 includes a gain on change in control of interests of $49.9 million and transaction costs of $3.7 million as if they were recognized on January 1, 2015. Dispositions of Operating Real Estate During 2016 During the nine months ended September 30, 2016, we sold 34 self-storage properties. As a result, the carrying value of our Operating real estate decreased by $137.1 million from December 31, 2015 to September 30, 2016 (Note 13). Real Estate Under Construction The following table provides the activity of our Real estate under construction (in thousands):
Capitalized Funds — During the nine months ended September 30, 2016, we capitalized real estate under construction totaling $12.4 million, including accrued costs of $8.4 million in non-cash investing activity, $2.3 million in funding of build-to-suit activity and $1.7 million funded for tenant improvements on three properties. Placed into Service — During the nine months ended September 30, 2016, we placed into service four build-to-suit projects totaling $10.9 million and landlord-funded tenant improvements of $0.9 million, all of which were substantially completed as of September 30, 2016. Ending Balance — At September 30, 2016, we had two partially completed build-to-suit projects. The aggregate unfunded commitment on the remaining build-to-suit projects totaled approximately $9.7 million and $2.8 million at September 30, 2016 and December 31, 2015, respectively. Assets Held for Sale Below is a summary of our properties held for sale (in thousands):
At September 30, 2016, we had one property classified as Assets held for sale (Note 15). At December 31, 2015, we did not have any properties classified as Assets held for sale. |
Finance Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Receivables | Finance Receivables Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in direct financing leases and loans receivable. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated financial statements. Our loans receivable are included in Other assets, net in the consolidated financial statements. Earnings from our loans receivable are included in Other interest income in the consolidated financial statements. Net Investments in Direct Financing Leases On February 10, 2016, we entered into a net lease financing transaction for an industrial facility in Houston, Texas for $4.2 million. In connection with this business combination, we expensed acquisition-related costs and fees of $0.3 million, which are included in Acquisition expenses in the consolidated financial statements. On April 8, 2016, we entered into a net lease financing transaction for six newspaper printing facilities in Ohio, North Carolina, Pennsylvania and Missouri for $12.0 million, including capitalized acquisition-related costs and fees of $0.5 million. Loans Receivable 127 West 23rd Manager, LLC — On February 3, 2015, we provided financing of $12.6 million to a subsidiary of 127 West 23rd Manager, LLC for the acquisition of a building in New York, New York that is intended to be developed as a hotel. The loan has an interest rate of 7% and had a scheduled maturity on February 3, 2016, subject to extension options. In connection with this transaction, during the three months ended March 31, 2015, we expensed acquisition-related costs and fees of $0.1 million, which are included in Acquisition expenses in the consolidated financial statements. During 2016, the borrower exercised multiple options to extend the loan. At September 30, 2016, the balance of the loan receivable remained $12.6 million. On November 4, 2016, we received full repayment of the $12.6 million balance of this loan receivable. 1185 Broadway LLC — On January 8, 2015, we provided a mezzanine loan of $30.0 million to a subsidiary of 1185 Broadway LLC for the development of a hotel on a parcel of land in New York, New York. The mezzanine loan is collateralized by an equity interest in a subsidiary of 1185 Broadway LLC. It has an interest rate of 10% and had a scheduled maturity on January 8, 2016. In connection with this transaction, during the three months ended March 31, 2015, we expensed acquisition-related costs and fees of $0.3 million, which are included in Acquisition expenses in the consolidated financial statements. During 2016, the borrower exercised options that extended the maturity of the loan to January 8, 2017. The agreement also contains rights to certain fees upon maturity and an equity interest in the underlying entity that has been recorded in Other assets, net in the consolidated financial statements. At September 30, 2016, the balance of the loan receivable including interest thereon was $31.5 million. China Alliance Properties Limited — On December 14, 2010, we provided financing of $40.0 million to China Alliance Properties Limited, a subsidiary of Shanghai Forte Land Co., Ltd. The financing was provided through a collateralized loan that was guaranteed by Shanghai Forte Land Co., Ltd.’s parent company, Fosun International Limited. It had an interest rate of 11% and was repaid in full to us on December 11, 2015. Credit Quality of Finance Receivables We generally seek investments in facilities that we believe are critical to a tenant’s business and that we believe have a low risk of tenant default. At both September 30, 2016 and December 31, 2015, none of the balances of our finance receivables were past due and we had not established any allowances for credit losses. Additionally, there were no modifications of finance receivables during the nine months ended September 30, 2016 other than the extensions noted above. We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. The credit quality evaluation of our finance receivables was last updated in the third quarter of 2016. A summary of our finance receivables by internal credit quality rating is as follows (dollars in thousands):
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Equity Investments in Real Estate |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Investments in Real Estate | Equity Investments in Real Estate We own equity interests in net-leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly-owned with affiliates. We account for these investments under the equity method of accounting. Earnings for each investment are recognized in accordance with each respective investment agreement and, where applicable, based upon an allocation of the investment’s net assets at book value as if the investment were hypothetically liquidated at the end of each reporting period. The following table presents Equity in earnings in equity method investments in real estate, which represents our proportionate share of the income or losses of these investments, as well as amortization of basis differences related to purchase accounting adjustments (in thousands):
The following table sets forth our ownership interests in our equity investments in real estate and their respective carrying values, along with funding to developers for the acquisition, development, and construction of real estate, or ADC Arrangements, that are recorded as equity investments (dollars in thousands):
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Aggregate distributions from our interests in unconsolidated real estate investments were $49.1 million and $31.0 million for the nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016 and December 31, 2015, the unamortized basis differences on our equity investments were $22.3 million and $26.5 million, respectively. |
Intangible Assets and Liabilities |
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Intangible Assets And Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Liabilities | Intangible Assets and Liabilities In connection with our acquisitions of properties, we have recorded net lease intangibles that are being amortized over periods ranging from one year to 53 years. In addition, we have several ground lease intangibles that are being amortized over periods of up to 94 years. In-place lease intangibles and tenant relationship intangibles are included in In-place lease and tenant relationship intangible assets, net in the consolidated financial statements. Above-market rent, below-market ground lease (as lessee) intangibles, and goodwill are included in Other intangible assets, net in the consolidated financial statements. Below-market rent and above-market ground lease (as lessor) intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements. In connection with our investment activity during the nine months ended September 30, 2016, we recorded net lease intangibles comprised as follows (life in years, dollars in thousands):
Intangible assets, intangible liabilities, and goodwill are summarized as follows (in thousands):
Net amortization of intangibles, including the effect of foreign currency translation, was $9.5 million for both the three months ended September 30, 2016 and 2015, and $29.1 million and $28.5 million for the nine months ended September 30, 2016 and 2015, respectively. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Rental income; amortization of below-market ground lease and above-market ground lease intangibles is included in Property expenses; and amortization of in-place lease and tenant relationship intangibles is included in Depreciation and amortization. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, foreign currency forward contracts, and foreign currency collars; and Level 3, for securities and other derivative assets that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions. Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, we have also provided the unobservable inputs along with their weighted-average ranges. Derivative Assets — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of interest rate caps, foreign currency forward contracts, stock warrants, foreign currency collars and a swaption (Note 9). The interest rates caps, foreign currency forward contracts, foreign currency collars, and swaption were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. The stock warrants were measured at fair value using internal valuation models that incorporated market inputs and our own assumptions about future cash flows. We classified these assets as Level 3 because they are not traded in an active market. Derivative Liabilities — Our derivative liabilities, which are included in Accounts payable, accrued expenses and other liabilities in the consolidated financial statements, are comprised of interest rate swaps and foreign currency collars (Note 9). These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. We did not have any transfers into or out of Level 1, Level 2, and Level 3 category of measurements during either the nine months ended September 30, 2016 or 2015. Our other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):
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We estimated that our other financial assets and liabilities (excluding net investments in direct financing leases) had fair values that approximated their carrying values at both September 30, 2016 and December 31, 2015. Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges) We periodically assess whether there are any indicators that the value of our real estate investments may be impaired or that their carrying value may not be recoverable. For investments in real estate held for use for which an impairment indicator is identified, we follow a two-step process to determine whether the investment is impaired and to determine the amount of the charge. First, we compare the carrying value of the property’s asset group to the future undiscounted net cash flows that we expect the property’s asset group will generate, including any estimated proceeds from the eventual sale of the property’s asset group. If this amount is less than the carrying value, the property’s asset group is considered to be not recoverable. We then measure the impairment charge as the excess of the carrying value of the property’s asset group over the estimated fair value of the property’s asset group, which is primarily determined using market information such as recent comparable sales, broker quotes, or third-party appraisals. If relevant market information is not available or is not deemed appropriate, we perform a future net cash flow analysis, discounted for inherent risk associated with each investment. We determined that the significant inputs used to value these investments fall within Level 3 for fair value reporting. As a result of our assessments, we calculated impairment charges based on market conditions and assumptions. The valuation of real estate is subject to significant judgment and actual results may differ materially if market conditions or the underlying assumptions change. The following table presents information about the asset for which we recorded an impairment charge that was measured at fair value on a non-recurring basis (in thousands):
During both the three and nine months ended September 30, 2016, we recognized an impairment charge of $29.2 million on one property in order to reduce the carrying value of the property to its estimated fair value. The fair value measurements for the property approximated its estimated selling price, less estimated costs to sell. We used available information, including third-party broker information and internal discounted cash flow models (Level 3 inputs), in determining the fair value of this property. |
Risk Management and Use of Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management and Use of Derivative Financial Instruments | Risk Management and Use of Derivative Financial Instruments Risk Management In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing assets and liabilities, including the Senior Credit Facility (Note 10). Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, as well as changes in the value of our other investments due to changes in interest rates or other market factors. We own investments in Europe and Asia and are subject to risks associated with fluctuating foreign currency exchange rates. Derivative Financial Instruments When we use derivative instruments, it is generally to reduce our exposure to fluctuations in interest rates and foreign currency exchange rate movements. We have not entered into, and do not plan to enter into, financial instruments for trading or speculative purposes. In addition to entering into derivative instruments on our own behalf, we may also be a party to derivative instruments that are embedded in other contracts and we may be granted common stock warrants by lessees when structuring lease transactions, which are considered to be derivative instruments. The primary risks related to our use of derivative instruments include a counterparty to a hedging arrangement defaulting on its obligation and a downgrade in the credit quality of a counterparty to such an extent that our ability to sell or assign our side of the hedging transaction is impaired. While we seek to mitigate these risks by entering into hedging arrangements with large financial institutions that we deem to be creditworthy, it is possible that our hedging transactions, which are intended to limit losses, could adversely affect our earnings. Furthermore, if we terminate a hedging arrangement, we may be obligated to pay certain costs, such as transaction or breakage fees. We have established policies and procedures for risk assessment and the approval, reporting, and monitoring of derivative financial instrument activities. We measure derivative instruments at fair value and record them as assets or liabilities, depending on our rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated, and that qualified, as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Other comprehensive income (loss) until the hedged item is recognized in earnings. For a derivative designated, and that qualified, as a net investment hedge, the effective portion of the change in the fair value and/or the net settlement of the derivative are reported in Other comprehensive income (loss) as part of the cumulative foreign currency translation adjustment. Amounts are reclassified out of Other comprehensive income (loss) into earnings when the hedged investment is either sold or substantially liquidated. The ineffective portion of the change in fair value of any derivative is immediately recognized in earnings. The following table sets forth certain information regarding our derivative instruments (in thousands):
All derivative transactions with an individual counterparty are governed by a master International Swap and Derivatives Association agreement, which can be considered as a master netting arrangement; however, we report all our derivative instruments on a gross basis on our consolidated financial statements. At both September 30, 2016 and December 31, 2015, no cash collateral had been posted or received for any of our derivative positions. The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):
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Amounts reported in Other comprehensive income (loss) related to interest rate swaps will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive income (loss) related to foreign currency derivative contracts will be reclassified to Other income and (expenses) when the hedged foreign currency contracts are settled. At September 30, 2016, we estimated that an additional $2.3 million and $6.9 million will be reclassified as interest expense and as other expenses, respectively, during the next 12 months. The following table presents the impact of our derivative instruments in the consolidated financial statements (in thousands):
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See below for information regarding why we enter into our derivative instruments and concerning derivative instruments owned by unconsolidated investments, which are excluded from the tables above. Interest Rate Swaps, Caps and Swaptions We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we attempt to obtain mortgage financing on a long-term, fixed-rate basis. However, from time to time, we or our investment partners have obtained, and may in the future obtain, variable-rate, non-recourse mortgage loans and, as a result, we have entered into, and may continue to enter into, interest rate swap agreements, interest rate cap agreements or swaptions with counterparties. Interest rate swaps, which effectively convert the variable-rate debt service obligations of a loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable–rate debt obligations while allowing participants to share downward shifts in interest rates. A swaption gives us the right but not the obligation to enter into an interest rate swap, of which the terms and conditions are set on the trade date, on a specified date in the future. Our objective in using these derivatives is to limit our exposure to interest rate movements. The interest rate swaps, caps, and swaption that our consolidated subsidiaries had outstanding at September 30, 2016 are summarized as follows (currency in thousands):
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The interest rate swap and interest rate cap that our unconsolidated jointly-owned investments had outstanding at September 30, 2016, which were designated as cash flow hedges, are summarized as follows (currency in thousands):
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Foreign Currency Contracts We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the British pound sterling, the Japanese yen, and the Norwegian krone. We manage foreign currency exchange rate movements by generally placing our debt service obligation on an investment in the same currency as the tenant’s rental obligation to us. This reduces our overall exposure to the net cash flow from that investment. However, we are subject to foreign currency exchange rate movements to the extent that there is a difference in the timing and amount of the rental obligation and the debt service. Realized and unrealized gains and losses recognized in earnings related to foreign currency transactions are included in Other income and (expenses) in the consolidated financial statements. In order to hedge certain of our foreign currency cash flow exposures, we enter into foreign currency forward contracts and collars. A foreign currency forward contract is a commitment to deliver a certain amount of currency at a certain price on a specific date in the future. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. By entering into forward contracts and holding them to maturity, we are locked into a future currency exchange rate for the term of the contract. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. Our foreign currency forward contracts and foreign currency collars have maturities of 78 months or less. The following table presents the foreign currency derivative contracts we had outstanding and their designations at September 30, 2016 (currency in thousands):
Credit Risk-Related Contingent Features We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of September 30, 2016. At September 30, 2016, our total credit exposure was $47.3 million and the maximum exposure to any single counterparty was $19.7 million. Some of the agreements with our derivative counterparties contain cross-default provisions that could trigger a declaration of default on our derivative obligations if we default, or are capable of being declared in default, on certain of our indebtedness. At September 30, 2016, we had not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives that were in a net liability position was $12.0 million and $11.4 million at September 30, 2016 and December 31, 2015, respectively, which included accrued interest and any nonperformance risk adjustments. If we had breached any of these provisions at September 30, 2016 or December 31, 2015, we could have been required to settle our obligations under these agreements at their aggregate termination value of $13.1 million and $11.9 million, respectively. |
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Debt | Debt Non-Recourse Debt, net At September 30, 2016, our mortgage notes payable bore interest at fixed annual rates ranging from 1.9% to 10.9% and variable contractual annual rates ranging from 1.3% to 6.0%, with maturity dates ranging from October 2016 to 2031. Financing Activity During 2016 During the nine months ended September 30, 2016, we obtained five new non-recourse mortgage financings and completed two additional drawdowns on already existing mortgage financings totaling $122.2 million, net of debt discounts of $1.1 million, with a weighted-average annual interest rate of 1.1% and term of 6.0 years, of which $12.0 million related to an investment acquired during the current year and $110.2 million related to investments acquired during prior years. Additionally, in connection with the acquisition of the remaining 15% interest in a self-storage portfolio (Note 4), we assumed the remaining 15% of the outstanding mortgage debt totaling $69.8 million, net of debt discounts of $1.2 million, with a weighted-average annual interest rate of 4.5% and term of 1.1 years. During the nine months ended September 30, 2016, we defeased seven non-recourse mortgage loans with outstanding principal balances totaling $121.9 million and recognized losses on extinguishment of debt totaling $23.6 million. These mortgage loans had a weighted-average interest rate of 4.9% and a weighted-average remaining term to maturity of 5.7 years and encumbered a total of 52 self-storage properties, 34 of which were sold (Note 13) and 18 of which were refinanced with new non-recourse mortgage loans totaling $65.9 million, net of discounts of $0.1 million. These loans have a weighted-average interest rate of 3.02% and weighted-average term to maturity of 4.8 years. Additionally, during both the three and nine months ended September 30, 2016, we refinanced one non-recourse mortgage loan totaling $11.2 million with new non-recourse mortgage financing totaling $16.7 million, which has an annual interest rate of 1.9% and term of 4.8 years. Senior Credit Facility On August 26, 2015, we entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, and a syndicate of other lenders, which we refer to herein as the Credit Agreement. The Credit Agreement was amended on March 31, 2016 to clarify the Restricted Payments covenant (see below), no other terms were changed. The Credit Agreement provides for a $200.0 million senior unsecured revolving credit facility, or the Revolver, and a $50.0 million delayed-draw term loan facility, or the Term Loan. We refer to the Revolver and the Term Loan together as the Senior Credit Facility, which has a maximum aggregate principal amount of $250.0 million and, subject to lender approval, an accordion feature of $250.0 million. The Senior Credit Facility is scheduled to mature on August 26, 2018, and may be extended by us for two 12-month periods. The Senior Credit Facility provides for an annual interest rate of either (i) the Eurocurrency Rate or (ii) the Base Rate, in each case plus the Applicable Rate (each as defined in the Credit Agreement). With respect to the Revolver, the Applicable Rate on Eurocurrency loans and letters of credit ranges from 1.50% to 2.25% (based on the London Interbank Offered Rate, or LIBOR) and the Applicable Rate on Base Rate loans ranges from 0.50% to 1.25% (as defined in the Credit Agreement), depending on our leverage ratio. With respect to the Term Loan, the Applicable Rate on Eurocurrency loans and letters of credit ranges from 1.45% to 2.20% (based on LIBOR) and the Applicable Rate on Base Rate loans ranges from 0.45% to 1.20% (as defined in the Credit Agreement), depending on our leverage ratio. In addition, we pay a fee of either 0.15% or 0.30% on the unused portion of the Senior Credit Facility. If usage of the Senior Credit Facility is equal to or greater than 50% of the Aggregate Commitments, the Unused Fee Rate will be 0.15%, and if usage of the Senior Credit Facility is less than 50% of the Aggregate Commitments, the Unused Fee Rate will be 0.30%. In connection with the transaction, we incurred costs of $1.9 million, which are being amortized to interest expense over the remaining term of the Senior Credit Facility. The following table presents a summary of our Senior Credit Facility (dollars in thousands):
On September 30, 2016, we exercised the delayed draw option on our Term Loan and borrowed $50.0 million. The Term Loan bears interest at LIBOR + 1.55% and is scheduled to mature on August 26, 2018, unless extended pursuant to its terms. At September 30, 2016, availability under the Senior Credit Facility was $200.0 million. The Revolver and Term Loan are used for our working capital needs and for new investments, as well as for general corporate purposes. We are required to ensure that the total Restricted Payments (as defined in the Amended Credit Agreement) in an aggregate amount in any fiscal year does not exceed the greater of 95% of MFFO and the amount of Restricted Payments required in order for us to (i) maintain our REIT status and (ii) avoid the payment of federal or state income or excise tax. Restricted Payments include quarterly dividends and the total amount of shares repurchased by us, if any, in excess of $100.0 million per year. In addition to placing limitations on dividend distributions and share repurchases, the Credit Agreement also stipulates certain customary financial covenants. We were in compliance with all such covenants at September 30, 2016. Scheduled Debt Principal Payments Scheduled debt principal payments during the remainder of 2016, each of the next four calendar years following December 31, 2016, and thereafter through 2031 are as follows (in thousands):
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Certain amounts in the table above are based on the applicable foreign currency exchange rate at September 30, 2016. The carrying value of our Non-recourse debt, net increased by $13.0 million in the aggregate from December 31, 2015 to September 30, 2016 due to the weakening of the U.S. dollar relative to foreign currencies, particularly the euro, partially offset by the strengthening of the U.S. dollar relative to the British pound sterling, during the same period. |
Commitments and Contingencies |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies At September 30, 2016, we were not involved in any material litigation. Various claims and lawsuits arising in the normal course of business are pending against us. The results of these proceedings are not expected to have a material adverse effect on our consolidated financial position or results of operations. See Note 4 for unfunded construction commitments. |
Equity |
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Equity | Equity Reclassifications Out of Accumulated Other Comprehensive Loss The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands):
Distributions Declared During the third quarter of 2016, our board of directors declared a quarterly distribution of $0.1625 per share, which was paid on October 14, 2016 to stockholders of record on September 30, 2016, in the aggregate amount of $55.7 million. During the nine months ended September 30, 2016, our board of directors declared distributions in the aggregate amount of $166.2 million, which equates to $0.4875 per share. |
Property Dispositions |
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Property Dispositions | Property Dispositions From time to time, we may decide to sell a property. We have an active capital recycling program, with a goal of extending the average lease term through reinvestment, improving portfolio credit quality through dispositions and acquisitions of assets, increasing the asset criticality factor in our portfolio, and/or executing strategic dispositions of assets. We may decide to dispose of a property due to vacancy, tenants electing not to renew their leases, tenant insolvency, or lease rejection in the bankruptcy process. In such cases, we assess whether we can obtain the highest value from the property by selling it, as opposed to re-leasing it. We may also sell a property when we receive an unsolicited offer or negotiate a price for an investment that is consistent with our strategy for that investment. When it is appropriate to do so, we classify the property as an asset held for sale on our consolidated balance sheet. Property Dispositions The results of operations for properties that have been sold or classified as held for sale are included in the consolidated financial statements and are summarized as follows (in thousands):
2016 — During the three months ended September 30, 2016, we sold 22 self-storage properties for total proceeds of $151.3 million, net of closing costs, and recognized a gain on sale of $82.3 million. The proceeds from the sale were used to repay a non-recourse mortgage loan encumbering the properties with an outstanding principal balance of $41.8 million, and as a result, we recorded a loss on extinguishment of debt of $8.2 million. During the nine months ended September 30, 2016, we sold 34 self-storage properties for total proceeds of $259.1 million, net of closing costs and recognized a gain on the sale of these assets of $132.7 million in the aggregate. Proceeds from the sales were used to repay non-recourse mortgage loans encumbering the properties with outstanding principal balances aggregating $84.7 million, and as a result, we recorded a loss on extinguishment of debt of $15.8 million. During the three months ended September 30, 2016, we entered into an agreement with a tenant that occupies the majority of the square footage in a domestic office building to terminate their lease contingent upon selling the property to a third party. At September 30, 2016, the land and building related to this property were classified as held for sale as the sale is considered probable of closing, and an impairment of $29.2 million was recognized during each of the three and nine months ended September 30, 2016 (Note 4, Note 8) related to the carrying value of the land and building. 2015 — In connection with the partial sale of our investment in I Shops LLC in 2014, we deferred 15% of the gain due to our then-existing purchase option to acquire a 15% equity interest in the parent company that owns I Shops LLC. Upon expiration of the purchase option on January 31, 2015, we recognized the previously deferred gain of $2.2 million during the nine months ended September 30, 2015. |
Segment Reporting |
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Segment Reporting | Segment Reporting We operate in two reportable business segments: Net Lease and Self-Storage. Our Net Lease segment includes our domestic and foreign investments in net-leased properties, whether they are accounted for as operating leases or direct financing leases. Our Self-Storage segment is comprised of our investments in self-storage properties. In addition, we have our investments in loans receivable, CMBS, one hotel, and other properties, which are included in our All Other category. The following tables present a summary of comparative results and assets for these business segments (in thousands):
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Basis of Presentation (Policies) |
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Basis of Presentation | Basis of Presentation Our interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a fair statement of our consolidated financial position, results of operations, and cash flows in accordance with generally accepted accounting principles in the United States, or GAAP. |
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Basis of Consolidation | Basis of Consolidation Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries and our tenancy-in-common interest, as described below. The portions of equity in consolidated subsidiaries that are not attributable, directly or indirectly, to us are presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated. |
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Recently Adopted Accounting Policy | On January 1, 2016, we adopted the Financial Accounting Standards Board’s, or FASB’s, Accounting Standards Update, or ASU, 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, as described in the Recent Accounting Pronouncements section below, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. When we obtain an economic interest in an entity, we evaluate the entity to determine if it should be deemed a variable interest entity, or VIE, and, if so, whether we are the primary beneficiary and are therefore required to consolidate the entity. We apply accounting guidance for consolidation of VIEs to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Fixed price purchase and renewal options within a lease, as well as certain decision-making rights within a loan or joint-venture agreement, can cause us to consider an entity a VIE. Limited partnerships and other similar entities that operate as a partnership will be considered a VIE unless the limited partners hold substantive kick-out rights or participation rights. Significant judgment is required to determine whether a VIE should be consolidated. We review the contractual arrangements provided for in the partnership agreement or other related contracts to determine whether the entity is considered a VIE, and to establish whether we have any variable interests in the VIE. We then compare our variable interests, if any, to those of the other variable interest holders to determine which party is the primary beneficiary of the VIE based on whether the entity (i) has the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We performed this analysis on all of our subsidiary entities following the guidance in ASU 2015-02 to determine whether they qualify as VIEs and whether they should be consolidated or accounted for as equity investments in an unconsolidated venture. As part of this change in guidance, we determined that 15 entities that were previously classified as voting interest entities should now be classified as VIEs as of January 1, 2016 and therefore included in our VIE disclosures. However, there was no change in determining whether or not we consolidate these entities as a result of the new guidance. We elected to retrospectively adopt ASU 2015-02, which resulted in changes to our VIE disclosures within the consolidated balance sheets. There were no other changes to our consolidated balance sheets or results of operations for the periods presented. The liabilities of these VIEs are non-recourse to us and can only be satisfied from each VIE’s respective assets. At September 30, 2016, we considered 29 entities VIEs, 14 of which we consolidated as we are considered the primary beneficiary and two of which we accounted for as loans receivable. The following table presents a summary of selected financial data of the consolidated VIEs, included in the consolidated balance sheets (in thousands):
At September 30, 2016 and December 31, 2015 we had 13 and 14 unconsolidated VIEs, respectively, all of which we account for under the equity method of accounting. We do not consolidate these entities because we are not the primary beneficiary and the nature of our involvement in the activities of these entities allows us to exercise significant influence but does not give us power over decisions that significantly affect the economic performance of these entities. As of September 30, 2016 and December 31, 2015, the carrying amount of our investments in these entities was $396.6 million, and $432.6 million, respectively, and our maximum exposure to loss in these entities was limited to our investments in the entities. At September 30, 2016, we had an investment in a tenancy-in-common interest in various international properties. Consolidation of this investment is not required as such interest does not qualify as a VIE and does not meet the control requirement for consolidation. Accordingly, we account for this investment using the equity method of accounting. We use the equity method of accounting because the shared decision-making involved in a tenancy-in-common interest investment provides us with significant influence on the operating and financial decisions of this investment. At times, the carrying value of our equity investments may fall below zero for certain investments. We intend to fund our share of the jointly-owned investments’ future operating deficits should the need arise. However, we have no legal obligation to pay for any of the liabilities of such investments nor do we have any legal obligation to fund operating deficits. At September 30, 2016, none of our equity investments had carrying values below zero. On January 1, 2016, we adopted ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30) as described in the Recent Accounting Pronouncements section below. ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. As a result of adopting this guidance, we reclassified $12.8 million of deferred financing costs, net from Other assets, net to Non-recourse debt, net and Senior Credit Facility, net as of December 31, 2015. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 does not apply to our lease revenues, but will apply to reimbursed tenant costs and revenues generated from our operating properties. Additionally, this guidance modifies disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 for all entities by one year, beginning in 2018, with early adoption permitted but not before 2017, the original public company effective date. We are currently evaluating the impact of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). ASU 2015-02 amends the current consolidation guidance, including modification of the guidance for evaluating whether limited partnerships and similar legal entities are VIEs or voting interest entities. The guidance does not amend the existing disclosure requirements for VIEs or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, ASU 2015-02 requires an entity to classify a limited liability company or a limited partnership as a VIE unless the partnership provides partners with either substantive kick-out rights or substantive participating rights over the managing member or general partner. Please refer to the discussion in the Basis of Consolidation section above. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs, which were previously recognized as an asset and requires that they be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not affect the recognition and measurement guidance for debt issuance costs. ASU 2015-03 is effective for periods beginning after December 15, 2015, and retrospective application is required. We adopted ASU 2015-03 on January 1, 2016 and have disclosed the reclassification of our debt issuance costs in the Reclassifications section above. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). ASU 2015-16 eliminates the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, early adoption is permitted and prospective application is required for adjustments that are identified after the effective date of this update. We elected to early adopt ASU 2015-16 and implemented the standard prospectively beginning July 1, 2015. The adoption and implementation of the standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 outlines a new model for accounting by lessees, whereby their rights and obligations under substantially all leases, existing and new, would be capitalized and recorded on the balance sheet. For lessors, however, the accounting remains largely unchanged from the current model, with the distinction between operating and financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new standard also replaces existing sale-leaseback guidance with a new model applicable to both lessees and lessors. Additionally, the new standard requires extensive quantitative and qualitative disclosures. ASU 2016-02 is effective for U.S. GAAP public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; for all other entities, the final lease standard will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application will be permitted for all entities. The new standard must be adopted using a modified retrospective transition of the new guidance and provides for certain practical expedients. Transition will require application of the new model at the beginning of the earliest comparative period presented. We are evaluating the impact of the new standard and have not yet determined if it will have a material impact on our business or our consolidated financial statements. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. ASU 2016-05 clarifies that a change in counterparty to a derivative contract in and of itself, does not require the dedesignation of a hedging relationship. ASU 2016-05 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted and entities have the option of adopting this guidance on a prospective basis to new derivative contracts or on a modified retrospective basis. We elected to early adopt ASU 2016-05 on January 1, 2016 on a prospective basis and there was no impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323). ASU 2016-07 simplifies the transition to the equity method of accounting. ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Instead the equity method of accounting will be applied prospectively from the date significant influence is obtained. The new standard should be applied prospectively for investments that qualify for the equity method of accounting in interim and annual periods beginning after December 15, 2016. Early adoption is permitted and we elected to early adopt this standard as of January 1, 2016. The adoption of this standard had no impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. ASU 2016-13 introduces a new model for estimating credit losses for certain types of financial instruments, including loans receivable, held-to-maturity debt securities and net investments in direct financing leases, amongst other financial instruments. ASU 2016-13 also modifies the impairment model for available-for-sale debt securities and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for losses. ASU 2016-13 will be effective for public business entities in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 intends to reduce diversity in practice for certain cash flow classifications, including, but not limited to (i) debt prepayment or debt extinguishment costs, (ii) contingent consideration payments made after a business combination, (iii) proceeds from the settlement of insurance claims, and (iv) distributions received from equity method investees. ASU 2016-15 will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early application of the guidance permitted. We are in the process of evaluating the impact of adopting ASU 2016-15 on our consolidated financial statements. In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. ASU 2016-17 changes how a reporting entity that is a decision maker should consider indirect interests in a VIE held through an entity under common control. If a decision maker must evaluate whether it is the primary beneficiary of a VIE, it will only need to consider its proportionate indirect interest in the VIE held through a common control party. ASU 2016-17 amends ASU 2015-02, which we adopted on January 1, 2016, and which currently directs the decision maker to treat the common control party’s interest in the VIE as if the decision maker held the interest itself. ASU 2016-17 will be effective for public business entities in fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. We are in the process of evaluating the impact of adopting ASU 2016-17 on our consolidated financial statements. |
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Equity Method Investments | We own equity interests in net-leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly-owned with affiliates. We account for these investments under the equity method of accounting. Earnings for each investment are recognized in accordance with each respective investment agreement and, where applicable, based upon an allocation of the investment’s net assets at book value as if the investment were hypothetically liquidated at the end of each reporting period. |
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Intangible Assets and Liabilities | In connection with our acquisitions of properties, we have recorded net lease intangibles that are being amortized over periods ranging from one year to 53 years. In addition, we have several ground lease intangibles that are being amortized over periods of up to 94 years. In-place lease intangibles and tenant relationship intangibles are included in In-place lease and tenant relationship intangible assets, net in the consolidated financial statements. Above-market rent, below-market ground lease (as lessee) intangibles, and goodwill are included in Other intangible assets, net in the consolidated financial statements. Below-market rent and above-market ground lease (as lessor) intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Rental income; amortization of below-market ground lease and above-market ground lease intangibles is included in Property expenses; and amortization of in-place lease and tenant relationship intangibles is included in Depreciation and amortization. |
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Fair Value of Financial Instruments | Derivative Assets — Our derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of interest rate caps, foreign currency forward contracts, stock warrants, foreign currency collars and a swaption (Note 9). The interest rates caps, foreign currency forward contracts, foreign currency collars, and swaption were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. The stock warrants were measured at fair value using internal valuation models that incorporated market inputs and our own assumptions about future cash flows. We classified these assets as Level 3 because they are not traded in an active market. Derivative Liabilities — Our derivative liabilities, which are included in Accounts payable, accrued expenses and other liabilities in the consolidated financial statements, are comprised of interest rate swaps and foreign currency collars (Note 9). These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps, interest rate swaps, foreign currency forward contracts, and foreign currency collars; and Level 3, for securities and other derivative assets that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring us to develop our own assumptions. |
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Derivatives | We measure derivative instruments at fair value and record them as assets or liabilities, depending on our rights or obligations under the applicable derivative contract. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative designated, and that qualified, as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognized in Other comprehensive income (loss) until the hedged item is recognized in earnings. For a derivative designated, and that qualified, as a net investment hedge, the effective portion of the change in the fair value and/or the net settlement of the derivative are reported in Other comprehensive income (loss) as part of the cumulative foreign currency translation adjustment. Amounts are reclassified out of Other comprehensive income (loss) into earnings when the hedged investment is either sold or substantially liquidated. The ineffective portion of the change in fair value of any derivative is immediately recognized in earnings. |
Basis of Presentation Basis of Presentation (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The following table presents a summary of selected financial data of the consolidated VIEs, included in the consolidated balance sheets (in thousands):
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Agreements and Transactions with Related Parties (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The following tables present a summary of fees we paid, expenses we reimbursed, and distributions we made to our Advisor and other affiliates in accordance with the relevant agreements (in thousands):
__________
The following table presents a summary of amounts included in Due to affiliates in the consolidated financial statements (in thousands):
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Net Investments in Properties and Real Estate Under Construction (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Properties | Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):
Operating real estate, which consists of our domestic self-storage operations, at cost, is summarized as follows (in thousands):
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following tables present a summary of assets acquired and liabilities assumed, and revenues and earnings thereon since the respective date of acquisition through September 30, 2016 (in thousands):
(a) The purchase price for this transaction was allocated to the assets acquired and liabilities assumed based upon its preliminary fair value. The information in this table is based on the best estimates of management as of the date of this Report. We are in the process of finalizing our assessment of the fair value of the assets acquired and liabilities assumed. Accordingly, the fair value of the assets acquired and liabilities assumed are subject to change. |
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Schedule Of Revenues and Net Income | (b) Includes a $49.9 million gain on change in control of interests. (c) Includes equity in earnings of equity method investments in real estate of $0.4 million.
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Business Acquisition, Pro Forma Information | The pro forma financial information is not necessarily indicative of what the actual results would have been had the acquisition actually occurred on January 1, 2015, nor does it purport to represent the results of operations for future periods (in thousands).
___________ (a) Pro forma net income for the nine months ended September 30, 2015 includes a gain on change in control of interests of $49.9 million and transaction costs of $3.7 million as if they were recognized on January 1, 2015. |
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Schedule of Real Estate Under Construction | The following table provides the activity of our Real estate under construction (in thousands):
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Schedule of Assets Held for Sale | Below is a summary of our properties held for sale (in thousands):
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Finance Receivables (Tables) |
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Schedule of Financing Receivable Credit Quality Indicators | A summary of our finance receivables by internal credit quality rating is as follows (dollars in thousands):
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Equity Investments in Real Estate (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | The following table presents Equity in earnings in equity method investments in real estate, which represents our proportionate share of the income or losses of these investments, as well as amortization of basis differences related to purchase accounting adjustments (in thousands):
The following table sets forth our ownership interests in our equity investments in real estate and their respective carrying values, along with funding to developers for the acquisition, development, and construction of real estate, or ADC Arrangements, that are recorded as equity investments (dollars in thousands):
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Intangible Assets and Liabilities (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets And Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Acquired Intangible Assets Liabilities By Major Class | In connection with our investment activity during the nine months ended September 30, 2016, we recorded net lease intangibles comprised as follows (life in years, dollars in thousands):
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Schedule Of Intangible Assets and Liabilities | Intangible assets, intangible liabilities, and goodwill are summarized as follows (in thousands):
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Other Financial Instruments In Carrying Values And Fair Values | Our other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands):
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Schedule Of Fair Value Impairment Charges Using Unobservable Inputs Nonrecurring Basis | The following table presents information about the asset for which we recorded an impairment charge that was measured at fair value on a non-recurring basis (in thousands):
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Risk Management and Use of Derivative Financial Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table sets forth certain information regarding our derivative instruments (in thousands):
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) | The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The following table presents the impact of our derivative instruments in the consolidated financial statements (in thousands):
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Schedule of Derivative Instruments | The interest rate swaps, caps, and swaption that our consolidated subsidiaries had outstanding at September 30, 2016 are summarized as follows (currency in thousands):
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The interest rate swap and interest rate cap that our unconsolidated jointly-owned investments had outstanding at September 30, 2016, which were designated as cash flow hedges, are summarized as follows (currency in thousands):
__________
The following table presents the foreign currency derivative contracts we had outstanding and their designations at September 30, 2016 (currency in thousands):
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Debt (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities | The following table presents a summary of our Senior Credit Facility (dollars in thousands):
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Schedule of Debt | Scheduled debt principal payments during the remainder of 2016, each of the next four calendar years following December 31, 2016, and thereafter through 2031 are as follows (in thousands):
__________
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Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income | The following tables present a reconciliation of changes in Accumulated other comprehensive loss by component for the periods presented (in thousands):
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Property Dispositions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations | The results of operations for properties that have been sold or classified as held for sale are included in the consolidated financial statements and are summarized as follows (in thousands):
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Segment Reporting (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue from Segments to Consolidated | The following tables present a summary of comparative results and assets for these business segments (in thousands):
|
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Reconciliation of Assets from Segment to Consolidated |
|
Organization (Narratives) (Details) ft² in Millions |
9 Months Ended |
---|---|
Sep. 30, 2016
ft²
segment
property
tenant
| |
Real Estate Properties | |
Capital interest in operating partnership | 99.99% |
Number of real estate properties | 388 |
Number of tenants | tenant | 116 |
Square footage of real estate properties | ft² | 42 |
Number of reportable segments | segment | 2 |
Operating real estate | |
Real Estate Properties | |
Number of real estate properties | 38 |
Square footage of operating properties | ft² | 3 |
Self storage | |
Real Estate Properties | |
Number of real estate properties | 37 |
Hotel | |
Real Estate Properties | |
Number of real estate properties | 1 |
Agreements and Transactions with Related Parties (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Amounts Included in the Consolidated Statements of Income | ||||
Asset management fees | $ 7,489 | $ 7,422 | $ 22,456 | $ 21,864 |
Available Cash Distributions | 5,276 | 5,837 | 17,803 | 17,690 |
Personnel and overhead reimbursements | 2,293 | 3,086 | 7,318 | 9,238 |
Acquisition expenses | 1,403 | 0 | 2,844 | 430 |
Interest expense on deferred acquisition fees and loan from affiliate | 47 | 113 | 176 | 246 |
Operating expenses | 16,508 | 16,458 | 50,597 | 49,468 |
Acquisition Fees Capitalized | ||||
Personnel and overhead reimbursements | 108 | 0 | 221 | 0 |
Current acquisition fees | 0 | 563 | 550 | 5,500 |
Deferred acquisition fees | 0 | 450 | 440 | 4,182 |
Transaction fees incurred | $ 108 | $ 1,013 | $ 1,211 | $ 9,682 |
Agreements and Transactions with Related Parties (Details 2) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Due to Affiliates | ||
Deferred acquisition fees, including interest | $ 4,436 | $ 6,134 |
Asset management fees payable | 2,446 | 2,497 |
Reimbursable costs | 2,187 | 3,150 |
Current acquisition fees | 245 | 1,847 |
Accounts payable | 75 | 6 |
Due to Related Parties | $ 9,389 | $ 13,634 |
Net Investments in Properties and Real Estate Under Construction (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investments in real estate | ||
Less: Accumulated depreciation | $ (288,813) | $ (256,175) |
Net investments in properties | 2,671,246 | 2,678,223 |
Real estate | ||
Investments in real estate | ||
Land | 565,927 | 560,257 |
Buildings and improvements | 2,135,259 | 2,098,620 |
Less: Accumulated depreciation | (271,602) | (225,867) |
Net investments in properties | 2,429,584 | 2,433,010 |
Operating real estate | ||
Investments in real estate | ||
Land | 55,688 | 66,066 |
Buildings and improvements | 203,185 | 209,455 |
Less: Accumulated depreciation | (17,211) | (30,308) |
Net investments in properties | $ 241,662 | $ 245,213 |
Net Investments in Properties and Real Estate Under Construction (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Liabilities assumed at fair value: | ||||
Gain on change in control of interests | $ 0 | $ 0 | $ (49,922) | $ 0 |
Madison Storage NYC, LLC and Veritas Group IX-NYC, LLC | ||||
Investments In Real Estate | ||||
Cash consideration | 11,363 | |||
Assets acquired at fair value: | ||||
Land | 26,941 | 26,941 | ||
Buildings | 109,399 | 109,399 | ||
In-place lease intangible assets | 9,783 | 9,783 | ||
Other assets acquired | 1,705 | 1,705 | ||
Total assets acquired | 147,828 | 147,828 | ||
Liabilities assumed at fair value: | ||||
Non-recourse debt, net | (70,578) | (70,578) | ||
Other liabilities assumed | (831) | (831) | ||
Total liabilities assumed | (71,409) | (71,409) | ||
Total identifiable net assets | 76,419 | 76,419 | ||
Gain on change in control of interests | (49,922) | |||
Carrying value of previously held equity investment | (15,134) | (15,134) | ||
Total assets acquired less previously held equity investments | $ 11,363 | $ 11,363 |
Net Investments in Properties and Real Estate Under Construction (Details 3) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Business Acquisition | |||||
Revenues | $ 110,076 | $ 108,202 | $ 326,487 | $ 316,620 | |
Net income | 67,045 | 29,199 | 213,903 | 92,416 | |
Net income attributable to CPA:17 - Global | $ 58,218 | $ 20,052 | $ 185,499 | $ 63,071 | |
Madison Storage NYC, LLC and Veritas Group IX-NYC, LLC | |||||
Business Acquisition | |||||
Revenues | $ 5,159 | ||||
Net income | 42,891 | ||||
Net income attributable to CPA:17 - Global | $ 42,891 |
Net Investments in Properties and Real Estate Under Construction (Details 4) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Business Acquisition, Pro Forma Information | ||||
Pro forma total revenues | $ 110,076 | $ 110,919 | $ 329,100 | $ 324,361 |
Pro forma net income | 68,347 | 28,023 | 167,667 | 135,062 |
Pro forma net income attributable to noncontrolling interests | (8,827) | (9,147) | (28,405) | (29,345) |
Pro forma net income attributable to CPA®:17 – Global | $ 59,520 | $ 18,876 | $ 139,262 | $ 105,717 |
Pro forma basic and diluted weighted-average shares outstanding | 343,209,362 | 335,668,313 | 341,325,683 | 333,523,528 |
Pro-forma basic and diluted income per share | $ 0.17 | $ 0.06 | $ 0.41 | $ 0.32 |
Net Investments in Properties and Real Estate Under Construction (Details 5) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Real Estate Under Construction | |
Beginning balance | $ 1,068 |
Ending balance | 1,578 |
Real estate under construction | |
Real Estate Under Construction | |
Beginning balance | 1,068 |
Capitalized funds | 12,360 |
Placed into service | (11,840) |
Foreign currency translation adjustments | (10) |
Ending balance | $ 1,578 |
Net Investments in Properties and Real Estate Under Construction (Details 6) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Long Lived Assets Held-for-sale [Line Items] | ||
Assets held for sale | $ 14,850 | $ 0 |
Disposal Group, Not Discontinued Operations [Member] | ||
Long Lived Assets Held-for-sale [Line Items] | ||
Assets held for sale | $ 14,850 | $ 0 |
Intangible Assets and Liabilities (Narratives) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Intangible Assets Liabilities | ||||
Net amortization of intangibles | $ 9.5 | $ 9.5 | $ 29.1 | $ 28.5 |
Minimum | ||||
Intangible Assets Liabilities | ||||
Finite-lived intangibles, useful life | 1 year | |||
Maximum | ||||
Intangible Assets Liabilities | ||||
Finite-lived intangibles, useful life | 53 years | |||
Maximum | Ground lease | ||||
Intangible Assets Liabilities | ||||
Finite-lived intangibles, useful life | 94 years |
Intangible Assets and Liabilities (Details 1) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Acquired Intangible Assets Liabilities | |
Amortizable Intangible Assets | $ 17,450 |
Below-market rent | |
Acquired Intangible Assets Liabilities | |
Finite lived intangibles asset liability useful life | 18 years 9 months 18 days |
Amortizable Intangible Liability | $ (3,329) |
In-place lease intangible assets, net | |
Acquired Intangible Assets Liabilities | |
Weighted average useful life, intangible assets | 8 years 7 months 6 days |
Amortizable Intangible Assets | $ 17,229 |
Above-market rent intangible assets, net | |
Acquired Intangible Assets Liabilities | |
Weighted average useful life, intangible assets | 20 years |
Amortizable Intangible Assets | $ 221 |
Fair Value Measurements (Narratives) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Fair Value Inputs | |||||
Deferred finance costs | $ 10,388,000 | $ 10,388,000 | |||
Impairment of CMBS | 29,183,000 | $ 0 | 29,183,000 | $ 1,023,000 | |
Nonrecurring | Level 3 | |||||
Fair Value Inputs | |||||
Impairment of CMBS | 29,183,000 | $ 0 | 29,183,000 | 0 | |
CMBS | Nonrecurring | Level 3 | |||||
Fair Value Inputs | |||||
Impairment of CMBS | 0 | $ 1,000,000 | |||
Accounting Standards Update 2015-03 | Non recourse debt | |||||
Fair Value Inputs | |||||
Deferred finance costs | $ 10,200,000 | $ 10,200,000 | $ 12,500,000 |
Fair Value Measurements (Details 1) - Level 3 - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Carrying Value | ||
Fair Value, Balance Sheet Grouping | ||
Non-recourse debt | $ 2,017,477 | $ 1,881,774 |
CMBS | 4,006 | 2,765 |
Fair Value | ||
Fair Value, Balance Sheet Grouping | ||
Non-recourse debt | 2,069,921 | 1,937,459 |
CMBS | $ 8,194 | $ 8,739 |
Fair Value Measurements (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Impairment charges | $ 29,183 | $ 0 | $ 29,183 | $ 1,023 |
Nonrecurring | Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Impairment charges | 29,183 | 0 | 29,183 | 0 |
Real estate | Nonrecurring | Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Fair Value Measurements | $ 14,850 | 0 | 14,850 | 0 |
Impairment charges | $ 0 | $ 29,183 | $ 0 |
Risk Management and Use of Derivative Financial Instruments (Narratives) (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Derivative Instrument Detail | ||
Net collateral posted for derivatives | $ 0 | $ 0 |
Derivative instrument remaining maturity period | 6 years 6 months | |
Collateral received | $ 0 | |
Total credit exposure on derivatives | 47,300,000 | |
Derivatives, net liability position | 12,000,000 | 11,400,000 |
Aggregate termination value for immediate settlement | 13,100,000 | $ 11,900,000 |
Single counterparty | ||
Derivative Instrument Detail | ||
Total credit exposure on derivatives | 19,700,000 | |
Interest expense | ||
Derivative Instrument Detail | ||
Estimated amount reclassified from OCI to income, derivatives | 2,300,000 | |
Other income and expense | ||
Derivative Instrument Detail | ||
Estimated amount reclassified from OCI to income, derivatives | $ 6,900,000 |
Risk Management and Use of Derivative Financial Instruments (Details 6) - Sep. 30, 2016 € in Thousands, $ in Thousands |
USD ($)
instrument
|
EUR (€)
instrument
|
---|---|---|
Derivative Instrument Detail | ||
Derivative fair value | $ (10,931) | |
Cash Flow Hedging | Interest rate swaps | ||
Derivative Instrument Detail | ||
Ownership interest, percentage | 85.00% | 85.00% |
Derivative number of instruments | instrument | 1 | 1 |
Derivative notional amount | € | € 10,653 | |
Derivative fair value | $ (570) | |
Cash Flow Hedging | Interest rate cap | ||
Derivative Instrument Detail | ||
Ownership interest, percentage | 49.00% | 49.00% |
Derivative number of instruments | instrument | 1 | 1 |
Derivative notional amount | € | € 31,100 | |
Derivative fair value | $ 26 |
Debt (Details 1) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Senior Credit Facility | ||
Debt | ||
Debt | $ 50,000 | $ 112,834 |
Senior Credit Facility | USD | ||
Debt | ||
Debt | 0 | 112,834 |
Term Loan | ||
Debt | ||
Debt | $ 50,000 | $ 0 |
Term Loan | LIBOR | ||
Debt | ||
Debt instrument, variable interest rate | 1.55% |
Debt (Details 2) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Long-term Debt, Fiscal Year Maturity | |
2016 (remainder) | $ 199,531 |
2017 | 418,793 |
2018 | 228,260 |
2019 | 33,579 |
2020 | 142,789 |
Thereafter through 2031 | 1,058,792 |
Long-term debt | 2,081,744 |
Deferred finance costs | (10,388) |
Unamortized discount, net | (4,160) |
Total | $ 2,067,196 |
Equity (Narratives) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Equity [Abstract] | |||||
Distributions Declared Per Share (usd per share) | $ 0.1625 | $ 0.1625 | $ 0.4875 | $ 0.4875 | |
Distributions payable | $ 55,697 | $ 55,697 | $ 54,775 | ||
Dividend payable, date | Oct. 14, 2016 | ||||
Distributions paid | 165,296 | $ 161,481 | |||
Dividends declared | $ 166,218 | $ 162,537 |
Property Dispositions (Details 1) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Disposal Group, Including Discontinued Operation, Income Statement Disclosures | ||||
Revenues | $ 110,076 | $ 108,202 | $ 326,487 | $ 316,620 |
Expenses | (87,442) | (54,253) | (203,684) | (162,156) |
Gain on sale of real estate, net of tax | 82,287 | 0 | 132,702 | 2,197 |
(Loss) income before gain on sale of real estate | (15,242) | 29,199 | 81,201 | 90,219 |
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | ||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures | ||||
Revenues | 6,964 | 8,483 | 21,562 | 24,793 |
Expenses | (5,714) | (7,653) | (18,746) | (23,081) |
Gain on sale of real estate, net of tax | 82,287 | 0 | 132,702 | 2,197 |
Impairment charges | (29,183) | 0 | (29,183) | 0 |
Loss on extinguishment of debt | (8,218) | 0 | (15,807) | 0 |
(Loss) income before gain on sale of real estate | $ 46,136 | $ 830 | $ 90,528 | $ 3,909 |
Segment Reporting (Narratives) (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
segment
|
Sep. 30, 2015
USD ($)
|
|
Segment Reporting [Abstract] | ||||
Impairment charges | $ 29,183 | $ 0 | $ 29,183 | $ 1,023 |
Number of reportable segments | segment | 2 | |||
Gain on change in control of interests | $ 0 | $ 0 | $ 49,922 | $ 0 |
Segment Reporting (Details 2) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Segment Reporting Information, Additional Information | ||
Long-Lived Assets | $ 3,675,791 | $ 3,689,002 |
Assets | 4,762,887 | 4,613,190 |
Operating Segments | Net Lease | ||
Segment Reporting Information, Additional Information | ||
Long-Lived Assets | 3,190,781 | 3,169,885 |
Assets | 3,864,659 | 3,956,239 |
Operating Segments | Self-Storage | ||
Segment Reporting Information, Additional Information | ||
Long-Lived Assets | 241,662 | 261,273 |
Assets | 255,441 | 269,081 |
Operating Segments | All Other | ||
Segment Reporting Information, Additional Information | ||
Long-Lived Assets | 243,348 | 257,844 |
Assets | 293,380 | 309,288 |
Corporate | ||
Segment Reporting Information, Additional Information | ||
Long-Lived Assets | 0 | 0 |
Assets | $ 349,407 | $ 78,582 |
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