Maryland | 27-3099608 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
One Federal Street, 23rd Floor Boston, Massachusetts | 02110 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ |
Non-accelerated filer ¨ | Smaller reporting company ¨ |
(Do not check if a smaller reporting company) |
Class | Outstanding at November 2, 2016 | ||
Common Stock ($0.01 par value) | 75,588,466 | ||
9.0 % Series A Cumulative Redeemable Preferred Stock ($0.01 par value) | — | ||
6.625 % Series B Cumulative Redeemable Preferred Stock ($0.01 par value) | 2,800,000 | ||
6.875 % Series C Cumulative Redeemable Preferred Stock ($0.01 par value) | 3,000,000 |
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Rental Property: | |||||||
Land | $ | 254,909 | $ | 228,919 | |||
Buildings and improvements, net of accumulated depreciation of $183,386 and $150,395, respectively | 1,440,311 | 1,332,298 | |||||
Deferred leasing intangibles, net of accumulated amortization of $238,235 and $200,758, respectively | 276,829 | 276,272 | |||||
Total rental property, net | 1,972,049 | 1,837,489 | |||||
Cash and cash equivalents | 12,273 | 12,011 | |||||
Restricted cash | 9,325 | 8,395 | |||||
Tenant accounts receivable, net | 23,302 | 21,478 | |||||
Prepaid expenses and other assets | 24,978 | 18,064 | |||||
Interest rate swaps | — | 1,867 | |||||
Assets held for sale, net | 6,617 | — | |||||
Total assets | $ | 2,048,544 | $ | 1,899,304 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Unsecured credit facility | $ | 129,000 | $ | 56,000 | |||
Unsecured term loans, net | 297,032 | 296,618 | |||||
Unsecured notes, net | 397,909 | 397,720 | |||||
Mortgage notes, net | 200,855 | 229,910 | |||||
Accounts payable, accrued expenses and other liabilities | 34,994 | 25,662 | |||||
Interest rate swaps | 15,953 | 3,766 | |||||
Tenant prepaid rent and security deposits | 15,146 | 14,628 | |||||
Dividends and distributions payable | 8,814 | 8,234 | |||||
Deferred leasing intangibles, net of accumulated amortization of $10,132 and $8,536, respectively | 14,899 | 11,387 | |||||
Total liabilities | 1,114,602 | 1,043,925 | |||||
Commitments and contingencies (Note 10) | |||||||
Equity: | |||||||
Preferred stock, par value $0.01 per share, 15,000,000 shares authorized, | |||||||
Series A, 2,760,000 shares (liquidation preference of $25.00 per share) issued and outstanding at September 30, 2016 and December 31, 2015 | 69,000 | 69,000 | |||||
Series B, 2,800,000 shares (liquidation preference of $25.00 per share) issued and outstanding at September 30, 2016 and December 31, 2015 | 70,000 | 70,000 | |||||
Series C, 3,000,000 shares (liquidation preference of $25.00 per share) issued and outstanding at September 30, 2016 and no shares issued and outstanding at December 31, 2015 | 75,000 | — | |||||
Common stock, par value $0.01 per share, 150,000,000 shares authorized, 72,460,009 and 68,077,333 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 725 | 681 | |||||
Additional paid-in capital | 1,117,045 | 1,017,394 | |||||
Common stock dividends in excess of earnings | (416,540 | ) | (334,623 | ) | |||
Accumulated other comprehensive loss | (15,669 | ) | (2,350 | ) | |||
Total stockholders’ equity | 899,561 | 820,102 | |||||
Noncontrolling interest | 34,381 | 35,277 | |||||
Total equity | 933,942 | 855,379 | |||||
Total liabilities and equity | $ | 2,048,544 | $ | 1,899,304 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | |||||||||||||||
Rental income | $ | 53,511 | $ | 47,731 | $ | 156,575 | $ | 136,201 | |||||||
Tenant recoveries | 8,911 | 8,063 | 26,807 | 23,135 | |||||||||||
Other income | 173 | 127 | 327 | 410 | |||||||||||
Total revenue | 62,595 | 55,921 | 183,709 | 159,746 | |||||||||||
Expenses | |||||||||||||||
Property | 11,258 | 10,949 | 35,672 | 31,265 | |||||||||||
General and administrative | 7,603 | 6,429 | 26,373 | 21,453 | |||||||||||
Property acquisition costs | 1,978 | 1,006 | 3,113 | 2,511 | |||||||||||
Depreciation and amortization | 32,020 | 28,656 | 93,318 | 82,042 | |||||||||||
Loss on impairments | — | 5,733 | 11,231 | 8,378 | |||||||||||
Other expenses | 279 | 226 | 857 | 892 | |||||||||||
Total expenses | 53,138 | 52,999 | 170,564 | 146,541 | |||||||||||
Other income (expense) | |||||||||||||||
Interest income | 3 | 2 | 8 | 7 | |||||||||||
Interest expense | (10,504 | ) | (9,317 | ) | (31,841 | ) | (26,260 | ) | |||||||
Loss on extinguishment of debt | — | — | (1,973 | ) | — | ||||||||||
Gain on the sales of rental property, net | 643 | 1,713 | 21,589 | 1,713 | |||||||||||
Total other income (expense) | (9,858 | ) | (7,602 | ) | (12,217 | ) | (24,540 | ) | |||||||
Net income (loss) | $ | (401 | ) | $ | (4,680 | ) | $ | 928 | $ | (11,335 | ) | ||||
Less: loss attributable to noncontrolling interest after preferred stock dividends | (216 | ) | (359 | ) | (505 | ) | (951 | ) | |||||||
Net income (loss) attributable to STAG Industrial, Inc. | $ | (185 | ) | $ | (4,321 | ) | $ | 1,433 | $ | (10,384 | ) | ||||
Less: preferred stock dividends | 4,001 | 2,712 | 10,914 | 8,136 | |||||||||||
Less: amount allocated to participating securities | 95 | 95 | 289 | 291 | |||||||||||
Net loss attributable to common stockholders | $ | (4,281 | ) | $ | (7,128 | ) | $ | (9,770 | ) | $ | (18,811 | ) | |||
Weighted average common shares outstanding — basic and diluted | 71,130,848 | 67,799,700 | 68,984,670 | 65,803,304 | |||||||||||
Net loss per share — basic and diluted | |||||||||||||||
Net loss per share — basic and diluted | $ | (0.06 | ) | $ | (0.11 | ) | $ | (0.14 | ) | $ | (0.29 | ) |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | (401 | ) | $ | (4,680 | ) | $ | 928 | $ | (11,335 | ) | ||||
Other comprehensive income (loss): | |||||||||||||||
Income (loss) on interest rate swaps | 2,863 | (7,636 | ) | (14,028 | ) | (7,019 | ) | ||||||||
Other comprehensive income (loss) | 2,863 | (7,636 | ) | (14,028 | ) | (7,019 | ) | ||||||||
Comprehensive income (loss) | 2,462 | (12,316 | ) | (13,100 | ) | (18,354 | ) | ||||||||
Net loss attributable to noncontrolling interest after preferred stock dividends | 216 | 359 | 505 | 951 | |||||||||||
Other comprehensive (income) loss attributable to noncontrolling interest | (140 | ) | 371 | 709 | 343 | ||||||||||
Comprehensive income (loss) attributable to STAG Industrial, Inc. | $ | 2,538 | $ | (11,586 | ) | $ | (11,886 | ) | $ | (17,060 | ) |
Preferred Stock | Common Stock | Additional Paid-in Capital | Common Stock Dividends in excess of Earnings | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | Noncontrolling Interest - Unit holders in Operating Partnership | Total Equity | |||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||
Nine months ended September 30, 2016 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2015 | $ | 139,000 | 68,077,333 | $ | 681 | $ | 1,017,394 | $ | (334,623 | ) | $ | (2,350 | ) | $ | 820,102 | $ | 35,277 | $ | 855,379 | |||||||||||||||
Proceeds from sale of common stock | — | 4,201,500 | 42 | 100,672 | — | — | 100,714 | — | 100,714 | |||||||||||||||||||||||||
Proceeds from sale of series C preferred stock | 75,000 | — | — | — | — | — | 75,000 | — | 75,000 | |||||||||||||||||||||||||
Offering costs | — | — | — | (4,315 | ) | — | — | (4,315 | ) | — | (4,315 | ) | ||||||||||||||||||||||
Issuance of restricted stock, net | — | 99,968 | 1 | (1 | ) | — | — | — | — | — | ||||||||||||||||||||||||
Issuance of common stock | — | 12,716 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Dividends and distributions, net | (10,914 | ) | — | — | — | (72,436 | ) | — | (83,350 | ) | (4,118 | ) | (87,468 | ) | ||||||||||||||||||||
Non-cash compensation | — | — | — | 2,746 | — | — | 2,746 | 4,986 | 7,732 | |||||||||||||||||||||||||
Redemption of common units to common stock | — | 68,492 | 1 | 616 | — | — | 617 | (617 | ) | — | ||||||||||||||||||||||||
Rebalancing of noncontrolling interest | — | — | — | (67 | ) | — | — | (67 | ) | 67 | — | |||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (13,319 | ) | (13,319 | ) | (709 | ) | (14,028 | ) | |||||||||||||||||||||
Net income | 10,914 | — | — | — | (9,481 | ) | — | 1,433 | (505 | ) | 928 | |||||||||||||||||||||||
Balance, September 30, 2016 | $ | 214,000 | 72,460,009 | $ | 725 | $ | 1,117,045 | $ | (416,540 | ) | $ | (15,669 | ) | $ | 899,561 | $ | 34,381 | $ | 933,942 | |||||||||||||||
Nine months ended September 30, 2015 | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2014 | $ | 139,000 | 64,434,852 | $ | 644 | $ | 928,242 | $ | (203,241 | ) | $ | (489 | ) | $ | 864,156 | $ | 27,368 | $ | 891,524 | |||||||||||||||
Proceeds from sale of common stock | — | 3,456,403 | 35 | 74,857 | — | — | 74,892 | — | 74,892 | |||||||||||||||||||||||||
Offering costs | — | — | — | (1,229 | ) | — | — | (1,229 | ) | — | (1,229 | ) | ||||||||||||||||||||||
Issuance of restricted stock, net | — | 83,756 | 1 | (1 | ) | — | — | — | — | — | ||||||||||||||||||||||||
Issuance of common stock | — | 11,277 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Dividends and distributions, net | (8,136 | ) | — | — | — | (67,652 | ) | — | (75,788 | ) | (3,614 | ) | (79,402 | ) | ||||||||||||||||||||
Non-cash compensation | — | — | — | 2,115 | — | — | 2,115 | 3,552 | 5,667 | |||||||||||||||||||||||||
Redemption of common units to common stock | — | 90,824 | 1 | 1,002 | — | — | 1,003 | (1,003 | ) | — | ||||||||||||||||||||||||
Redemption of common units for cash | — | — | — | — | — | — | — | (64 | ) | (64 | ) | |||||||||||||||||||||||
Issuance of units | — | — | — | — | — | — | — | 21,902 | 21,902 | |||||||||||||||||||||||||
Rebalancing of noncontrolling interest | — | — | — | 10,141 | — | — | 10,141 | (10,141 | ) | — | ||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (6,676 | ) | (6,676 | ) | (343 | ) | (7,019 | ) | |||||||||||||||||||||
Net loss | 8,136 | — | — | — | (18,520 | ) | — | (10,384 | ) | (951 | ) | (11,335 | ) | |||||||||||||||||||||
Balance, September 30, 2015 | $ | 139,000 | 68,077,112 | $ | 681 | $ | 1,015,127 | $ | (289,413 | ) | $ | (7,165 | ) | $ | 858,230 | $ | 36,706 | $ | 894,936 |
Nine months ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 928 | $ | (11,335 | ) | ||
Adjustment to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 93,318 | 82,042 | |||||
Loss on impairments | 11,231 | 8,378 | |||||
Non-cash portion of interest expense | 1,208 | 907 | |||||
Intangible amortization in rental income, net | 4,751 | 6,331 | |||||
Straight-line rent adjustments, net | (2,205 | ) | (2,318 | ) | |||
Dividends on forfeited equity compensation | 3 | 15 | |||||
Loss on extinguishment of debt | 1,973 | — | |||||
Gain on the sales of rental property, net | (21,589 | ) | (1,713 | ) | |||
Non-cash compensation expense | 7,692 | 5,667 | |||||
Change in assets and liabilities: | |||||||
Tenant accounts receivable, net | (215 | ) | (1,477 | ) | |||
Restricted cash | (461 | ) | (582 | ) | |||
Prepaid expenses and other assets | (7,375 | ) | (4,407 | ) | |||
Accounts payable, accrued expenses and other liabilities | 8,128 | 6,821 | |||||
Tenant prepaid rent and security deposits | 518 | 1,728 | |||||
Total adjustments | 96,977 | 101,392 | |||||
Net cash provided by operating activities | 97,905 | 90,057 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of land and buildings and improvements | (195,893 | ) | (187,698 | ) | |||
Additions of land and building and improvements | (20,703 | ) | (10,053 | ) | |||
Acquisitions of other assets | — | (565 | ) | ||||
Proceeds from the sales of rental property, net | 50,301 | 9,186 | |||||
Restricted cash | (469 | ) | (1,052 | ) | |||
Acquisition deposits, net | (1,315 | ) | 1,425 | ||||
Acquisitions of deferred leasing intangibles | (51,937 | ) | (56,102 | ) | |||
Net cash used in investing activities | (220,016 | ) | (244,859 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from sale of series C preferred stock | 75,000 | — | |||||
Redemption of common units for cash | — | (64 | ) | ||||
Proceeds from unsecured credit facility | 286,000 | 190,750 | |||||
Repayment of unsecured credit facility | (213,000 | ) | (144,000 | ) | |||
Proceeds from unsecured notes | — | 120,000 | |||||
Repayment of mortgage notes | (33,084 | ) | (15,370 | ) | |||
Payment of loan fees and costs | (140 | ) | (3,019 | ) | |||
Payment of loan prepayment fees and costs | (1,969 | ) | — | ||||
Dividends and distributions | (86,890 | ) | (78,541 | ) | |||
Proceeds from sales of common stock | 100,714 | 74,892 | |||||
Offering costs | (4,258 | ) | (1,228 | ) | |||
Net cash provided by financing activities | 122,373 | 143,420 | |||||
Increase (decrease) in cash and cash equivalents | 262 | (11,382 | ) | ||||
Cash and cash equivalents—beginning of period | 12,011 | 23,878 | |||||
Cash and cash equivalents—end of period | $ | 12,273 | $ | 12,496 | |||
Supplemental disclosure: | |||||||
Cash paid for interest, net of capitalized interest | $ | 29,127 | $ | 22,445 | |||
Supplemental schedule of non-cash investing and financing activities | |||||||
Issuance of units for acquisitions of land and building and improvements and deferred leasing intangibles | $ | — | $ | 21,902 | |||
Additions to building and other capital improvements | $ | (1,004 | ) | $ | (565 | ) | |
Transfer of other assets to building and other capital improvements | $ | — | $ | 565 | |||
Acquisitions of land and buildings and improvements | $ | (3,392 | ) | $ | (34,460 | ) | |
Acquisitions of deferred leasing intangibles | $ | (938 | ) | $ | (10,203 | ) | |
Partial disposal of building due to involuntary conversion of building | $ | 492 | $ | — | |||
Investing other receivables due to involuntary conversion of building | $ | (492 | ) | $ | — | ||
Change in additions of land, building, and improvements included in accounts payable, accrued expenses, and other liabilities | $ | (583 | ) | $ | (1,687 | ) | |
Additions to building and improvements from non-cash compensation expense | $ | (14 | ) | $ | — | ||
Assumption of mortgage notes | $ | 4,037 | $ | 22,343 | |||
Fair market value adjustment to mortgage notes assumed | $ | 75 | $ | 418 | |||
Change in loan fees and costs and offering costs included in accounts payable, accrued expenses, and other liabilities | $ | 6 | $ | 64 | |||
Dividends and distributions declared but not paid | $ | 8,814 | $ | 8,228 |
Rental Property (in thousands) | September 30, 2016 | December 31, 2015 | ||||||
Land | $ | 254,909 | $ | 228,919 | ||||
Buildings, net of accumulated depreciation of $124,766 and $104,297, respectively | 1,318,058 | 1,232,360 | ||||||
Tenant improvements, net of accumulated depreciation of $29,389 and $26,283, respectively | 22,383 | 23,586 | ||||||
Building and land improvements, net of accumulated depreciation of $29,231 and $19,815, respectively | 91,413 | 74,694 | ||||||
Construction in progress | 8,457 | 1,658 | ||||||
Deferred leasing intangibles, net of accumulated amortization of $238,235 and $200,758, respectively | 276,829 | 276,272 | ||||||
Total rental property, net | $ | 1,972,049 | $ | 1,837,489 |
Location of Property | Square Feet | Buildings | Purchase Price (in thousands) | |||||||
Biddeford, ME | 265,126 | 2 | $ | 12,452 | ||||||
Fairfield, OH | 206,448 | 1 | 5,330 | |||||||
Mascot, TN | 130,560 | 1 | 4,500 | |||||||
Erlanger, KY | 108,620 | 1 | 5,600 | |||||||
Three months ended March 31, 2016 | 710,754 | 5 | $ | 27,882 | ||||||
West Chicago, IL | 249,470 | 1 | $ | 8,663 | ||||||
Visalia, CA | 635,281 | 1 | 27,921 | |||||||
Norcross, GA | 152,036 | 1 | 5,508 | |||||||
Reading, PA | 248,000 | 1 | 9,594 | |||||||
Charlotte, NC | 104,852 | 1 | 6,517 | |||||||
Three months ended June 30, 2016 | 1,389,639 | 5 | $ | 58,203 | ||||||
Columbia, SC | 185,600 | 1 | $ | 7,300 | ||||||
Graniteville, SC | 450,000 | 1 | 15,675 | |||||||
Fountain Inn, SC | 168,087 | 1 | 7,025 | |||||||
Langhorne, PA | 217,000 | 2 | 11,250 | |||||||
Warren, MI | 268,000 | 1 | 18,700 | |||||||
New Castle, DE | 485,987 | 1 | 27,500 | |||||||
Westborough, MA | 121,700 | 1 | 7,885 | |||||||
Cedar Hill, TX | 420,000 | 1 | 19,100 | |||||||
Forest Park, GA | 799,200 | 2 | 24,915 | |||||||
Rock Hill, SC | 315,520 | 1 | 9,850 | |||||||
Gardiner, ME | 265,000 | 1 | 16,800 | |||||||
Three months ended September 30, 2016 | 3,696,094 | 13 | $ | 166,000 | ||||||
Nine months ended September 30, 2016 | 5,796,487 | 23 | $ | 252,085 |
Acquired Assets and Liabilities | Purchase Price (in thousands) | Weighted Average Amortization Period (years) of Intangibles at Acquisition | ||||
Land | $ | 32,722 | N/A | |||
Buildings | 146,762 | N/A | ||||
Tenant improvements | 3,902 | N/A | ||||
Building and land improvements | 15,899 | N/A | ||||
Deferred leasing intangibles - In-place leases | 36,561 | 7.9 | ||||
Deferred leasing intangibles - Tenant relationships | 18,205 | 9.5 | ||||
Deferred leasing intangibles - Above market leases | 4,091 | 7.8 | ||||
Deferred leasing intangibles - Below market leases | (5,982 | ) | 8.8 | |||
Above market assumed debt adjustment | (75 | ) | 7.2 | |||
Total purchase price | $ | 252,085 | ||||
Less: Mortgage note assumed | (4,037 | ) | ||||
Net assets acquired | $ | 248,048 |
Results of Operations (in thousands) | Three months ended September 30, 2016 | Nine months ended September 30, 2016 | ||||||
Revenue | $ | 3,543 | $ | 4,950 | ||||
Property acquisition costs | $ | 1,715 | $ | 2,740 | ||||
Net loss | $ | 1,560 | $ | 2,521 |
Pro Forma (in thousands) (1) | Nine months ended September 30, 2016 | ||||
Total revenue | $ | 196,336 | |||
Net income | $ | 4,896 | (2) | ||
Net loss attributable to common stockholders | $ | 6,003 |
Pro Forma (in thousands) (3) | Nine months ended September 30, 2015 | ||||
Total revenue | $ | 188,176 | |||
Net loss | $ | 17,018 | (2) | ||
Net loss attributable to common stockholders | $ | 24,216 |
(1) | The unaudited pro forma information for the nine months ended September 30, 2016 is presented as if the properties acquired during the nine months ended September 30, 2016 had occurred at January 1, 2015, the beginning of the reporting period prior to acquisition. |
(2) | The net income for the nine months ended September 30, 2016 excludes approximately $2.7 million of property acquisition costs related to the acquisition of buildings that closed during the nine months ended September 30, 2016, and the net loss for the nine months ended September 30, 2015 was adjusted to include these acquisition costs. Net loss for the nine months ended September 30, 2015 excludes approximately $2.2 million of property acquisition costs related to the acquisition of buildings that closed during the nine months ended September 30, 2015. |
(3) | The unaudited pro forma information for the nine months ended September 30, 2015 is presented as if the properties acquired during the nine months ended September 30, 2016 and the properties acquired during the nine months ended September 30, 2015 had occurred at January 1, 2015 and January 1, 2014, respectively, the beginning of the reporting period prior to acquisition. |
Property Location | Buildings | Event or Change in Circumstance Leading to Impairment Evaluation(1) | Valuation technique utilized to estimate fair value | Fair Value(2) | Loss on Impairments | |||||||||
(in thousands) | ||||||||||||||
Fairfield, VA | 1 | Change in estimated hold period | (3) | Executed purchase and sale agreement | ||||||||||
Jackson, MS | 1 | Change in estimated hold period | (4) | Executed purchase and sale agreement | ||||||||||
Jackson, MS | 1 | Change in estimated hold period | (4) | Executed purchase and sale agreement | ||||||||||
Mishawaka, IN | 1 | Market leasing conditions | Discounted cash flows | (5) | ||||||||||
Newark, DE | 1 | Market leasing conditions | Discounted cash flows | (5) | ||||||||||
Seville, OH | 2 | Market leasing conditions | Discounted cash flows | (5) | ||||||||||
Sparks, MD | 2 | Change in estimated hold period | Discounted cash flows | (5) | ||||||||||
Three months ended June 30, 2016 | $ | 10,598 | $ | 11,231 | ||||||||||
Nine months ended September 30, 2016 | $ | 10,598 | $ | 11,231 |
(1) | The Company tested the asset group for impairment utilizing a probability weighted recovery analysis of certain scenarios, and it was determined that the carrying value of the property and intangibles were not recoverable from the estimated future undiscounted cash flows. |
(2) | The estimated fair value of the property is based on Level 3 inputs and is a non-recurring fair value measurement. |
(3) | This property was sold during the three months ended June 30, 2016. |
(4) | This property was sold during the three months ended September 30, 2016. |
(5) | Level 3 inputs used to determine fair value for the properties impaired for the nine months ended September 30, 2016: discount rates ranged from 8.5% to 13.0% and exit capitalization rates ranged from 8.5% to 12.0%. |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||
Deferred Leasing Intangibles (in thousands) | Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
Above market leases | $ | 70,354 | $ | (35,716 | ) | $ | 34,638 | $ | 69,815 | $ | (31,554 | ) | $ | 38,261 | ||||||||||
Other intangible lease assets | 444,710 | (202,519 | ) | 242,191 | 407,215 | (169,204 | ) | 238,011 | ||||||||||||||||
Total deferred leasing intangible assets | $ | 515,064 | $ | (238,235 | ) | $ | 276,829 | $ | 477,030 | $ | (200,758 | ) | $ | 276,272 | ||||||||||
Below market leases | $ | 25,031 | $ | (10,132 | ) | $ | 14,899 | $ | 19,923 | $ | (8,536 | ) | $ | 11,387 | ||||||||||
Total deferred leasing intangible liabilities | $ | 25,031 | $ | (10,132 | ) | $ | 14,899 | $ | 19,923 | $ | (8,536 | ) | $ | 11,387 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
Deferred Leasing Intangibles Amortization (in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net decrease to rental revenue related to above and below market lease amortization | $ | 1,564 | $ | 2,051 | $ | 4,751 | $ | 6,331 | ||||||||
Amortization expense related to other intangible lease assets | $ | 16,594 | $ | 15,327 | $ | 48,853 | $ | 44,296 |
Year | Amortization Expense Related to Other Intangible Lease Assets (in thousands) | Net Decrease to Rental Revenue Related to Above and Below Market Lease Amortization (in thousands) | ||||||
Remainder of 2016 | $ | 16,474 | $ | 1,454 | ||||
2017 | $ | 58,683 | $ | 4,767 | ||||
2018 | $ | 46,971 | $ | 3,545 | ||||
2019 | $ | 34,935 | $ | 3,026 | ||||
2020 | $ | 26,103 | $ | 2,618 |
Loan | Principal Outstanding as of September 30, 2016 (in thousands) | Principal Outstanding as of December 31, 2015 (in thousands) | Interest Rate (1) | Current Maturity | Prepayment Terms (2) | ||||||||||
Unsecured credit facility: | |||||||||||||||
Unsecured Credit Facility (3) | $ | 129,000 | $ | 56,000 | L + 1.15% | Dec-18-2019 | i | ||||||||
Total unsecured credit facility | 129,000 | 56,000 | |||||||||||||
Unsecured term loans: | |||||||||||||||
Unsecured Term Loan C (4) | — | — | L + 1.30% | Sep-29-2020 | i | ||||||||||
Unsecured Term Loan B | 150,000 | 150,000 | L + 1.70% | Mar-21-2021 | ii | ||||||||||
Unsecured Term Loan A | 150,000 | 150,000 | L + 1.65% | Mar-31-2022 | ii | ||||||||||
Total unsecured term loans | 300,000 | 300,000 | |||||||||||||
Less: Total unamortized deferred financing fees and debt issuance costs | (2,968 | ) | (3,382 | ) | |||||||||||
Total carrying value unsecured term loans | 297,032 | 296,618 | |||||||||||||
Unsecured notes: | |||||||||||||||
Series F Unsecured Notes | 100,000 | 100,000 | 3.98 | % | Jan-05-2023 | ii | |||||||||
Series A Unsecured Notes | 50,000 | 50,000 | 4.98 | % | Oct-1-2024 | ii | |||||||||
Series D Unsecured Notes | 100,000 | 100,000 | 4.32 | % | Feb-20-2025 | ii | |||||||||
Series B Unsecured Notes | 50,000 | 50,000 | 4.98 | % | Jul-1-2026 | ii | |||||||||
Series C Unsecured Notes | 80,000 | 80,000 | 4.42 | % | Dec-30-2026 | ii | |||||||||
Series E Unsecured Notes | 20,000 | 20,000 | 4.42 | % | Feb-20-2027 | ii | |||||||||
Total unsecured notes | 400,000 | 400,000 | |||||||||||||
Less: Total unamortized deferred financing fees and debt issuance costs | (2,091 | ) | (2,280 | ) | |||||||||||
Total carrying value unsecured notes | 397,909 | 397,720 | |||||||||||||
Mortgage notes (secured debt): | |||||||||||||||
Sun Life Assurance Company of Canada (U.S.) | — | 3,229 | 6.05 | % | Jun-1-2016 | iii | |||||||||
Webster Bank, National Association | — | 5,513 | 4.22 | % | Aug-4-2016 | iii | |||||||||
National Life Insurance Company | — | 4,775 | 5.75 | % | Aug-10-2016 | iii | |||||||||
Union Fidelity Life Insurance Co. | 5,478 | 5,754 | 5.81 | % | Apr-30-2017 | iv | |||||||||
Principal Life Insurance Company | 5,527 | 5,676 | 5.73 | % | May-05-2017 | iii | |||||||||
Webster Bank, National Association | 2,877 | 2,945 | 3.66 | % | May-29-2017 | iii | |||||||||
Webster Bank, National Association | 3,098 | 3,172 | 3.64 | % | May-31-2017 | iii | |||||||||
Wells Fargo, National Association | 4,061 | 4,115 | 5.90 | % | Aug-1-2017 | v | |||||||||
Connecticut General Life Insurance Company-1 Facility | 56,474 | 57,171 | 6.50 | % | Feb-1-2018 | vi | |||||||||
Connecticut General Life Insurance Company-2 Facility | 46,920 | 58,085 | 5.75 | % | Feb-1-2018 | vi | |||||||||
Connecticut General Life Insurance Company-3 Facility | 16,207 | 16,401 | 5.88 | % | Feb-1-2018 | vi | |||||||||
Wells Fargo Bank, National Association CMBS Loan | 57,007 | 63,897 | 4.31 | % | Dec-1-2022 | vii | |||||||||
Thrivent Financial for Lutherans | 4,037 | — | 4.78 | % | Dec-15-2023 | iii | |||||||||
Total mortgage notes | 201,686 | 230,733 | |||||||||||||
Add: Total unamortized fair market value premiums | 222 | 447 | |||||||||||||
Less: Total unamortized deferred financing fees and debt issuance costs | (1,053 | ) | (1,270 | ) | |||||||||||
Total carrying value mortgage notes | 200,855 | 229,910 | |||||||||||||
Total / weighted average interest rate (5) | $ | 1,024,796 | $ | 980,248 | 4.03 | % |
(1) | Current interest rate as of September 30, 2016. At September 30, 2016, the one-month LIBOR (“L”) was 0.53111%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. The spread over the applicable rate for the Company's unsecured credit facility and unsecured term loans is based on the Company's consolidated leverage ratio, as defined in the respective loan agreements. |
(2) | Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date; (iv) pre-payable without penalty two months prior to the maturity date; (v) pre-payable without penalty three months prior to the maturity date, however can be defeased; (vi) pre-payable without penalty six months prior to the maturity date; and (vii) pre-payable without penalty three months prior to the maturity date, however can be defeased beginning January 1, 2016. |
(3) | The capacity of the unsecured credit facility is $450.0 million. |
(4) | Capacity of $150.0 million, which the Company has until December 29, 2016 to draw. |
(5) | The weighted average interest rate was calculated using the fixed interest rate swapped on the current notional amount of $450.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. |
September 30, 2016 | December 31, 2015 | |||||||||||||||
Principal Outstanding | Fair Value | Principal Outstanding | Fair Value | |||||||||||||
Unsecured credit facility | $ | 129,000 | $ | 128,796 | $ | 56,000 | $ | 56,000 | ||||||||
Unsecured term loans | 300,000 | 304,613 | 300,000 | 303,457 | ||||||||||||
Unsecured notes | 400,000 | 422,653 | 400,000 | 392,054 | ||||||||||||
Mortgage notes | 201,686 | 207,623 | 230,733 | 237,327 | ||||||||||||
Total principal amount | 1,030,686 | $ | 1,063,685 | 986,733 | $ | 988,838 | ||||||||||
Add: Total unamortized fair market value premiums | 222 | 447 | ||||||||||||||
Less: Total unamortized deferred financing fees and debt issuance costs | (6,112 | ) | (6,932 | ) | ||||||||||||
Total carrying value | $ | 1,024,796 | $ | 980,248 |
Interest Rate Derivative Counterparty | Trade Date | Effective Date | Notional Amount (in thousands) | Fair Value (in thousands) | Pay Fixed Interest Rate | Receive Variable Interest Rate | Maturity Date | ||||||||||||
PNC Bank, N.A. | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
Bank of America, N.A. | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
UBS AG | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
Royal Bank of Canada | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
RJ Capital Services, Inc. | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7975 | % | One-month L | Sep-10-2017 | ||||||||
Bank of America, N.A. | Sep-20-2012 | Oct-10-2012 | $ | 25,000 | $ | (19 | ) | 0.7525 | % | One-month L | Sep-10-2017 | ||||||||
RJ Capital Services, Inc. | Sep-24-2012 | Oct-10-2012 | $ | 25,000 | $ | (13 | ) | 0.7270 | % | One-month L | Sep-10-2017 | ||||||||
Regions Bank | Mar-01-2013 | Mar-01-2013 | $ | 25,000 | $ | (376 | ) | 1.3300 | % | One-month L | Feb-14-2020 | ||||||||
Capital One, N.A. | Jun-13-2013 | Jul-01-2013 | $ | 50,000 | $ | (1,335 | ) | 1.6810 | % | One-month L | Feb-14-2020 | ||||||||
Capital One, N.A. | Jun-13-2013 | Aug-01-2013 | $ | 25,000 | $ | (686 | ) | 1.7030 | % | One-month L | Feb-14-2020 | ||||||||
Regions Bank | Sep-30-2013 | Feb-03-2014 | $ | 25,000 | $ | (928 | ) | 1.9925 | % | One-month L | Feb-14-2020 | ||||||||
The Toronto-Dominion Bank | Oct-14-2015 | Sep-29-2016 | $ | 25,000 | $ | (453 | ) | 1.3830 | % | One-month L | Sep-29-2020 | ||||||||
PNC Bank, N.A. | Oct-14-2015 | Sep-29-2016 | $ | 50,000 | $ | (921 | ) | 1.3906 | % | One-month L | Sep-29-2020 | ||||||||
Regions Bank | Oct-14-2015 | Sep-29-2016 | $ | 35,000 | $ | (641 | ) | 1.3858 | % | One-month L | Sep-29-2020 | ||||||||
U.S. Bank, N.A. | Oct-14-2015 | Sep-29-2016 | $ | 25,000 | $ | (464 | ) | 1.3950 | % | One-month L | Sep-29-2020 | ||||||||
Capital One, N.A. | Oct-14-2015 | Sep-29-2016 | $ | 15,000 | $ | (279 | ) | 1.3950 | % | One-month L | Sep-29-2020 | ||||||||
Royal Bank of Canada | Jan-08-2015 | Mar-20-2015 | $ | 25,000 | $ | (827 | ) | 1.7090 | % | One-month L | Mar-21-2021 | ||||||||
The Toronto-Dominion Bank | Jan-08-2015 | Mar-20-2015 | $ | 25,000 | $ | (828 | ) | 1.7105 | % | One-month L | Mar-21-2021 | ||||||||
The Toronto-Dominion Bank | Jan-08-2015 | Sep-10-2017 | $ | 100,000 | $ | (4,074 | ) | 2.2255 | % | One-month L | Mar-21-2021 | ||||||||
Wells Fargo Bank, N.A. | Jan-08-2015 | Mar-20-2015 | $ | 25,000 | $ | (1,064 | ) | 1.8280 | % | One-month L | Mar-31-2022 | ||||||||
The Toronto-Dominion Bank | Jan-08-2015 | Feb-14-2020 | $ | 25,000 | $ | (577 | ) | 2.4535 | % | One-month L | Mar-31-2022 | ||||||||
Regions Bank | Jan-08-2015 | Feb-14-2020 | $ | 50,000 | $ | (1,179 | ) | 2.4750 | % | One-month L | Mar-31-2022 | ||||||||
Capital One, N.A. | Jan-08-2015 | Feb-14-2020 | $ | 50,000 | $ | (1,229 | ) | 2.5300 | % | One-month L | Mar-31-2022 |
Balance Sheet Line Item (in thousands) | Notional Amount September 30, 2016 | Fair Value September 30, 2016 | Notional Amount December 31, 2015 | Fair Value December 31, 2015 | ||||||||||||
Interest rate swaps-Asset | $ | — | $ | — | $ | 275,000 | $ | 1,867 | ||||||||
Interest rate swaps-Liability | $ | 675,000 | $ | (15,953 | ) | $ | 400,000 | $ | (3,766 | ) |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Amount of income (loss) recognized in accumulated other comprehensive income (loss) on interest rate swaps (effective portion) | $ | 2,159 | $ | (8,564 | ) | $ | (16,206 | ) | $ | (9,540 | ) | |||||
Amount of loss reclassified from accumulated other comprehensive income (loss) into income (loss) as interest expense (effective portion) | $ | 704 | $ | 928 | $ | 2,178 | $ | 2,521 | ||||||||
Amount of loss recognized in interest expense (ineffective portion and amount excluded from effectiveness testing) | $ | — | $ | 92 | $ | — | $ | — |
Fair Value Measurements as of September 30, 2016 Using | ||||||||||||||||
Balance Sheet Line Item (in thousands) | Fair Value September 30, 2016 | Level 1 | Level 2 | Level 3 | ||||||||||||
Interest rate swaps-Asset | $ | — | $ | — | $ | — | $ | — | ||||||||
Interest rate swaps-Liability | $ | (15,953 | ) | $ | — | $ | (15,953 | ) | $ | — |
Fair Value Measurements as of December 31, 2015 Using | ||||||||||||||||
Balance Sheet Line Item (in thousands) | Fair Value December 31, 2015 | Level 1 | Level 2 | Level 3 | ||||||||||||
Interest rate swaps-Asset | $ | 1,867 | $ | — | $ | 1,867 | $ | — | ||||||||
Interest rate swaps-Liability | $ | (3,766 | ) | $ | — | $ | (3,766 | ) | $ | — |
Preferred Stock Issuances | Issuance Date | Number of Shares | Price and Liquidation Value Per Share | Interest Rate | ||||||||
Series A Cumulative Redeemable Preferred Stock | November 2, 2011 | 2,760,000 | $ | 25.00 | 9.000 | % | ||||||
Series B Cumulative Redeemable Preferred Stock | April 16, 2013 | 2,800,000 | $ | 25.00 | 6.625 | % | ||||||
Series C Cumulative Redeemable Preferred Stock | March 17, 2016 | 3,000,000 | $ | 25.00 | 6.875 | % |
Quarter Ended 2016 | Declaration Date | Series A Preferred Stock Per Share | Series B Preferred Stock Per Share | Series C Preferred Stock Per Share | Payment Date | |||||||||||
September 30 | August 1, 2016 | $ | 0.5625 | $ | 0.4140625 | $ | 0.4296875 | September 30, 2016 | ||||||||
June 30 | May 2, 2016 | 0.5625 | 0.4140625 | 0.4965300 | (1) | June 30, 2016 | ||||||||||
March 31 | February 22, 2016 | 0.5625 | 0.4140625 | — | March 31, 2016 | |||||||||||
Total | $ | 1.6875 | $ | 1.2421875 | $ | 0.9262175 |
(1) | Represents the period from March 17, 2016 through June 30, 2016. |
Quarter Ended 2015 | Declaration Date | Series A Preferred Stock Per Share | Series B Preferred Stock Per Share | Payment Date | ||||||||
December 31 | October 22, 2015 | $ | 0.5625 | $ | 0.4140625 | December 31, 2015 | ||||||
September 30 | July 21, 2015 | 0.5625 | 0.4140625 | September 30, 2015 | ||||||||
June 30 | May 4, 2015 | 0.5625 | 0.4140625 | June 30, 2015 | ||||||||
March 31 | February 20, 2015 | 0.5625 | 0.4140625 | March 31, 2015 | ||||||||
Total | $ | 2.2500 | $ | 1.6562500 |
ATM Stock Offering Program | Date | Maximum Aggregate Offering Price (in thousands) | Aggregate Common Stock Available as of September 30, 2016 (in thousands) | |||||||
2016 $200 million ATM | May 13, 2016 | $ | 200,000 | $ | 99,286 |
Nine months ended September 30, 2016 | |||||||||||||||||||
ATM Stock Offering Program | Shares Sold | Weighted Average Price Per Share | Gross Proceeds | Sales Agents’ Fee | Net Proceeds | ||||||||||||||
2016 $200 million ATM | 4,201,500 | $ | 23.97 | $ | 100,714 | $ | 1,511 | $ | 99,203 | ||||||||||
Total/weighted average | 4,201,500 | $ | 23.97 | $ | 100,714 | $ | 1,511 | $ | 99,203 |
Year ended December 31, 2015 | |||||||||||||||||||
ATM Stock Offering Program | Shares Sold | Weighted Average Price Per Share | Gross Proceeds | Sales Agents’ Fee | Net Proceeds | ||||||||||||||
2014 $200 million ATM(1) | 2,661,403 | $ | 21.63 | $ | 57,571 | $ | 864 | $ | 56,707 | ||||||||||
2014 $150 million ATM(1) | 795,000 | $ | 21.79 | 17,321 | 260 | 17,061 | |||||||||||||
Total/weighted average | 3,456,403 | $ | 21.67 | $ | 74,892 | $ | 1,124 | $ | 73,768 |
(1) | These programs ended before September 30, 2016. |
Month Ended 2016 | Declaration Date | Record Date | Per Share | Payment Date | ||||||
December 31 | August 1, 2016 | December 30, 2016 | $ | 0.115833 | January 17, 2017 | |||||
November 30 | August 1, 2016 | November 30, 2016 | 0.115833 | December 15, 2016 | ||||||
October 31 | August 1, 2016 | October 31, 2016 | 0.115833 | November 15, 2016 | ||||||
September 30 | May 2, 2016 | September 30, 2016 | 0.115833 | October 17, 2016 | ||||||
August 31 | May 2, 2016 | August 31, 2016 | 0.115833 | September 15, 2016 | ||||||
July 31 | May 2, 2016 | July 29, 2016 | 0.115833 | August 15, 2016 | ||||||
June 30 | February 22, 2016 | June 30, 2016 | 0.115833 | July 15, 2016 | ||||||
May 31 | February 22, 2016 | May 31, 2016 | 0.115833 | June 15, 2016 | ||||||
April 30 | February 22, 2016 | April 29, 2016 | 0.115833 | May 16, 2016 | ||||||
March 31 | October 22, 2015 | March 31, 2016 | 0.115833 | April 15, 2016 | ||||||
February 29 | October 22, 2015 | February 29, 2016 | 0.115833 | March 15, 2016 | ||||||
January 31 | October 22, 2015 | January 29, 2016 | 0.115833 | February 16, 2016 | ||||||
Total | $ | 1.389996 |
Month Ended 2015 | Declaration Date | Record Date | Per Share | Payment Date | ||||||
December 31 | July 21, 2015 | December 31, 2015 | $ | 0.1150 | January 15, 2016 | |||||
November 30 | July 21, 2015 | November 30, 2015 | 0.1150 | December 15, 2015 | ||||||
October 31 | July 21, 2015 | October 30, 2015 | 0.1150 | November 16, 2015 | ||||||
September 30 | May 4, 2015 | September 30, 2015 | 0.1150 | October 15, 2015 | ||||||
August 31 | May 4, 2015 | August 31, 2015 | 0.1150 | September 15, 2015 | ||||||
July 31 | May 4, 2015 | July 31, 2015 | 0.1150 | August 17, 2015 | ||||||
June 30 | February 20, 2015 | June 30, 2015 | 0.1125 | July 15, 2015 | ||||||
May 31 | February 20, 2015 | May 29, 2015 | 0.1125 | June 15, 2015 | ||||||
April 30 | February 20, 2015 | April 30, 2015 | 0.1125 | May 15, 2015 | ||||||
March 31 | October 30, 2014 | March 31, 2015 | 0.1125 | April 15, 2015 | ||||||
February 28 | October 30, 2014 | February 27, 2015 | 0.1125 | March 16, 2015 | ||||||
January 31 | October 30, 2014 | January 31, 2015 | 0.1125 | February 17, 2015 | ||||||
Total | $ | 1.3650 |
Unvested Restricted Shares of Common Stock | Shares | |||
Balance at December 31, 2014 | 263,916 | |||
Granted | 94,290 | (1) | ||
Vested | (72,185 | ) | ||
Forfeited | (14,906 | ) | ||
Balance at December 31, 2015 | 271,115 | |||
Granted | 101,289 | (2) | ||
Vested | (98,746 | ) | ||
Forfeited | (1,321 | ) | ||
Balance at September 30, 2016 | 272,337 |
(1) | The grant date fair value per share was $26.17. |
(2) | The grant date fair value per share was $17.98. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Vested restricted shares of common stock | — | — | 98,746 | 72,185 | ||||||||||||
Fair value of vested restricted shares of common stock (in thousands) | $ | — | $ | — | $ | 1,813 | $ | 1,751 |
LTIP Units | Other Common Units | Total Noncontrolling Common Units | Noncontrolling Interest | ||||||||
Balance at December 31, 2014 | 1,307,036 | 1,124,813 | 2,431,849 | 3.6 | % | ||||||
Granted/Issued | 323,069 | 864,283 | 1,187,352 | N/A | |||||||
Forfeitures | — | — | — | N/A | |||||||
Conversions from LTIP units to Other Common Units | (20,000 | ) | 20,000 | — | N/A | ||||||
Redemptions from Other Common Units to common stock | — | (90,824 | ) | (90,824 | ) | N/A | |||||
Redemption of Other Common Units for cash | — | (2,400 | ) | (2,400 | ) | N/A | |||||
Balance at December 31, 2015 | 1,610,105 | 1,915,872 | 3,525,977 | 4.9 | % | ||||||
Granted/Issued | 176,396 | — | 176,396 | N/A | |||||||
Forfeitures | — | — | — | N/A | |||||||
Conversions from LTIP units to Other Common Units | (58,492 | ) | 58,492 | — | N/A | ||||||
Redemptions from Other Common Units to common stock | — | (68,492 | ) | (68,492 | ) | N/A | |||||
Balance at September 30, 2016 | 1,728,009 | 1,905,872 | 3,633,881 | 4.8 | % |
Assumptions | ||||||||||||
Grant date | February 22, 2016 | January 8, 2016 | January 6, 2016 | |||||||||
Expected term (years) | 10 | 10 | 10 | |||||||||
Expected volatility | 22.0 | % | 22.0 | % | 22.0 | % | ||||||
Expected dividend yield | 6.0 | % | 6.0 | % | 6.0 | % | ||||||
Risk-free interest rate | 1.01 | % | 1.28 | % | 1.36 | % | ||||||
Fair value of LTIP units at issuance (in thousands) | $ | 277 | $ | 2,254 | $ | 390 | ||||||
LTIP units at issuance | 18,386 | 135,546 | 22,464 | |||||||||
Fair value unit price per LTIP unit at issuance | $ | 15.07 | $ | 16.63 | $ | 17.36 |
Unvested LTIP Units | LTIP Units | ||
Balance at December 31, 2014 | 448,887 | ||
Granted | 323,069 | ||
Vested | (237,046 | ) | |
Forfeited | — | ||
Balance at December 31, 2015 | 534,910 | ||
Granted | 176,396 | ||
Vested | (262,025 | ) | |
Forfeited | — | ||
Balance at September 30, 2016 | 449,281 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Vested LTIP units | 45,874 | 48,257 | 262,025 | 188,789 | ||||||||||||
Fair value of vested LTIP units (in thousands) | $ | 1,124 | $ | 879 | $ | 5,306 | $ | 3,963 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
Non-Cash Compensation Expense (in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Restricted stock | $ | 533 | $ | 478 | $ | 1,625 | $ | 1,462 | ||||||||
LTIP units | 1,099 | 1,221 | 4,992 | (1) | 3,552 | |||||||||||
Outperformance program | 115 | 131 | 350 | 393 | ||||||||||||
Performance units | 207 | — | 466 | — | ||||||||||||
Board of directors compensation (2) | 89 | 89 | 259 | 260 | ||||||||||||
Total non-cash compensation expense | $ | 2,043 | $ | 1,919 | $ | 7,692 | $ | 5,667 |
(1) | Inclusive of approximately $1.6 million of non-cash compensation expense during the nine months ended September 30, 2016 associated with the severance cost of an executive officer as discussed Note 7. |
(2) | All of the Company’s independent directors elected to receive shares of common stock in lieu of cash for their service during the three and nine months ended September 30, 2016 and September 30, 2015. The number of shares of common stock granted is calculated based on the trailing 10 days average common stock price ending on the third business day preceding the grant date. |
Earnings Per Share (in thousands, except share data) | Three months ended September 30, 2016 | |||
Numerator | ||||
Net loss | $ | (401 | ) | |
Less: preferred stock dividends | 4,001 | |||
Less: amount allocated to participating securities | 95 | |||
Less: loss attributable to noncontrolling interest after preferred stock dividends | (216 | ) | ||
Net loss attributable to common stockholders | $ | (4,281 | ) | |
Denominator | ||||
Weighted average common shares outstanding — basic and diluted | 71,130,848 | |||
Loss per share — basic and diluted | $ | (0.06 | ) |
Earnings Per Share (in thousands, except share data) | Nine months ended September 30, 2016 | |||
Numerator | ||||
Net income | $ | 928 | ||
Less: preferred stock dividends | 10,914 | |||
Less: amount allocated to participating securities | 289 | |||
Less: loss attributable to noncontrolling interest after preferred stock dividends | (505 | ) | ||
Net loss attributable to common stockholders | $ | (9,770 | ) | |
Denominator | ||||
Weighted average common shares outstanding — basic and diluted | 68,984,670 | |||
Loss per share — basic and diluted | $ | (0.14 | ) |
Earnings Per Share (in thousands, except share data) | Three months ended September 30, 2015 | |||
Numerator | ||||
Net loss | $ | (4,680 | ) | |
Less: preferred stock dividends | 2,712 | |||
Less: amount allocated to participating securities | 95 | |||
Less: loss attributable to noncontrolling interest after preferred stock dividends | (359 | ) | ||
Net loss attributable to common stockholders | $ | (7,128 | ) | |
Denominator | ||||
Weighted average common shares outstanding — basic and diluted | 67,799,700 | |||
Loss per share — basic and diluted | $ | (0.11 | ) |
Earnings Per Share (in thousands, except share data) | Nine months ended September 30, 2015 | |||
Numerator | ||||
Net loss | $ | (11,335 | ) | |
Less: preferred stock dividends | 8,136 | |||
Less: amount allocated to participating securities | 291 | |||
Less: loss attributable to noncontrolling interest after preferred stock dividends | (951 | ) | ||
Net loss attributable to common stockholders | $ | (18,811 | ) | |
Denominator | ||||
Weighted average common shares outstanding — basic and diluted | 65,803,304 | |||
Loss per share — basic and diluted | $ | (0.29 | ) |
• | the factors included in this report, including those set forth under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” |
• | our ability to raise equity capital on attractive terms; |
• | the competitive environment in which we operate; |
• | real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets; |
• | decreased rental rates or increased vacancy rates; |
• | potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants; |
• | acquisition risks, including our ability to identify and complete accretive acquisitions and/or failure of such acquisitions to perform in accordance with projections; |
• | the timing of acquisitions and dispositions; |
• | potential natural disasters and other potentially catastrophic events such as acts of war and/or terrorism; |
• | international, national, regional and local economic conditions; |
• | the general level of interest rates and currencies; |
• | potential changes in the law or governmental regulations that affect us and interpretations of those laws and regulations, including changes in real estate and zoning or real estate investment trust (“REIT”) tax laws, and potential increases in real property tax rates; |
• | financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all; |
• | credit risk in the event of non-performance by the counterparties to the interest rate swaps and revolving and unfunded debt; |
• | lack of or insufficient amounts of insurance; |
• | our ability to maintain our qualification as a REIT; |
• | our ability to retain key personnel; |
• | litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and |
• | possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us. |
Economic Indicators(1) | September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | |||||
GDP Growth Rate | 2.9% | 1.4% | 0.8% | 0.9% | 2.0% | |||||
Unemployment Rate | 5.0% | 4.9% | 5.0% | 5.0% | 5.1% | |||||
Change in Non-Farm Employment (in thousands) | 156 | 271 | 186 | 271 | 149 | |||||
Consumer Confidence Index | 103.5 | 97.4 | 96.1 | 96.3 | 102.6 | |||||
Purchasing Managers Index (ISM)(2) | 51.5% | 53.2% | 51.8% | 48.0% | 50.0% | |||||
10-year Treasury Yield | 1.60% | 1.49% | 1.78% | 2.27% | 2.06% | |||||
Seasonally Adjusted Annualized Rate US Total Vehicle Sales (in thousands) | 18,043 | 17,159 | 17,032 | 17,830 | 18,423 | |||||
Manufacturing New Orders: Durable Goods (in millions) | 226,796 | 219,055 | 228,499 | 223,402 | 223,693 |
(1) | Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, Conference Board, Board of Governors of the Federal Reserve System, U.S. Census Bureau, and Institute for Supply Management. Each statistic is the latest revision available at the time of publishing this report. |
(2) | ISM is a composite index based on a survey of over 300 purchasing and supply executives from across the country who respond to a monthly questionnaire about changes in production, new orders, new export orders, imports, employment, inventories, prices, lead-times, and timelines of supplier deliveries in their companies. When the index is over 50, it indicates expansion, while a reading below 50 signals contraction. |
• | an increasing attractiveness of the U.S. as a manufacturing and distribution location because of the size of the U.S. consumer market, an increase in overseas labor costs and the overall cost of supplying and shipping goods (i.e. the shortening and fattening of the supply chain); |
• | the overall quality of the transportation infrastructure in the U.S.; and |
• | the rise of e-commerce (as compared to the traditional retail store distribution model) and the concomitant demand by e-commerce industry participants for well-located, functional distribution space. |
Operating Portfolio | Square Feet | Cash Basis Rent Per Square Foot(1) | GAAP Basis Rent Per Square Foot(2) | Total Turnover Costs Per Square Foot(3) | Cash Rent Change(1) | GAAP Rent Change(2) | Weighted Average Lease Term(4) (years) | Rental Concessions per Square Foot(5) | ||||||||||||||||||||
Three months ended September 30, 2016 | ||||||||||||||||||||||||||||
New leases(6) | 75,500 | $ | 3.89 | $ | 3.89 | $ | 0.19 | (2.1 | )% | (2.1 | )% | 1.9 | $ | — | ||||||||||||||
Renewal leases(7) | 774,749 | 3.48 | 3.61 | 1.07 | 7.2 | % | 17.8 | % | 5.2 | 0.20 | ||||||||||||||||||
Total/weighted average | 850,249 | $ | 3.51 | $ | 3.63 | $ | 1.00 | 6.6 | % | 16.4 | % | 4.9 | $ | 0.18 | ||||||||||||||
Temporary leases(8) | 272,080 | |||||||||||||||||||||||||||
Total leasing activity | 1,122,329 | |||||||||||||||||||||||||||
Nine months ended September 30, 2016 | ||||||||||||||||||||||||||||
New leases(6) | 295,880 | $ | 4.20 | $ | 4.37 | $ | 1.47 | (2.1 | )% | (2.1 | )% | 5.5 | $ | 0.17 | ||||||||||||||
Renewal leases(7) | 4,185,546 | 3.95 | 4.08 | 0.63 | 0.5 | % | 6.9 | % | 4.6 | 0.17 | ||||||||||||||||||
Total/weighted average | 4,481,426 | $ | 3.96 | $ | 4.09 | $ | 0.68 | 0.5 | % | 6.8 | % | 4.6 | $ | 0.17 | ||||||||||||||
Temporary leases(8) | 935,820 | |||||||||||||||||||||||||||
Total leasing activity | 5,417,246 |
(1) | We define Cash Basis Rent Change as the ratio of the change in base rent (excluding straight-line rent adjustments and above/below market lease amortization as required by GAAP) of the Comparable Lease. We define a Comparable Lease as a lease with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership, leases on space with downtime in excess of two years, and leases with materially different lease structures. |
(2) | We define GAAP Rent Change as the change in the average base rent over the contractual lease term (excluding above/below market lease amortization) of the Comparable Lease. |
(3) | We define Turnover Costs as the costs for improvements of vacant and renewal spaces, as well as the commissions for leasing transactions. Turnover Costs per square foot represent the total turnover costs expected to be incurred on the leases signed during the period and do not reflect actual expenditures for the period. |
(4) | We define Weighted Average Lease Term as the contractual lease term in years as of the lease start date weighted by square footage. Weighted Average Lease Term related to acquired assets reflects the remaining lease term in years as of the acquisition date weighted by square footage. |
(5) | Represents the total concession (free rent) for the entire lease term. |
(6) | We define a New Lease as any lease that is signed for an initial term equal to or greater than twelve months for any vacant space; this includes a new tenant or an existing tenant that is expanding into new (additional) space. |
(7) | We define a Renewal Lease as a lease signed by an existing tenant to extend the term for twelve months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration and (iii) an early renewal or workout, which ultimately does extend the original term for twelve months or more, but the renewal term commences before the lease expiration of their current lease. |
(8) | We define a Temporary Lease or a License Agreement as any lease that is signed for an initial term of less than twelve months; this includes short-term new leases and short-term renewal leases. |
Lease Expiration Year | Number of Leases Expiring | Total Rentable Square Feet | % of Total Occupied Square Feet | Total Annualized Base Rental Revenue (in thousands) | % of Total Annualized Base Rental Revenue | ||||||||||
Available | — | 2,737,975 | — | $ | — | — | |||||||||
Month-to-month leases | 5 | 137,245 | 0.2 | % | 374 | 0.2 | % | ||||||||
Remainder of 2016 | 7 | 910,421 | 1.6 | % | 3,918 | 1.7 | % | ||||||||
2017 | 48 | 6,061,060 | 10.9 | % | 25,703 | 11.5 | % | ||||||||
2018 | 57 | 10,090,965 | 18.1 | % | 39,403 | 17.6 | % | ||||||||
2019 | 52 | 9,709,247 | 17.4 | % | 37,079 | 16.5 | % | ||||||||
2020 | 36 | 8,594,724 | 15.4 | % | 36,617 | 16.3 | % | ||||||||
2021 | 37 | 6,665,658 | 11.9 | % | 27,577 | 12.3 | % | ||||||||
2022 | 19 | 2,710,780 | 4.9 | % | 10,521 | 4.7 | % | ||||||||
2023 | 12 | 2,596,270 | 4.6 | % | 9,476 | 4.2 | % | ||||||||
2024 | 7 | 1,657,327 | 3.0 | % | 6,487 | 2.9 | % | ||||||||
2025 | 8 | 1,603,563 | 2.9 | % | 6,875 | 3.1 | % | ||||||||
Thereafter | 22 | 5,105,876 | 9.1 | % | 20,143 | 9.0 | % | ||||||||
Total/weighted average | 310 | 58,581,111 | 100.0 | % | $ | 224,173 | 100.0 | % |
Square Footage | Annualized Base Rental Revenue | ||||||||||||||||||
Building Type | Number of Buildings | Amount | % | Occupancy Rate(1) | Amount (in thousands) | % | |||||||||||||
Warehouse/Distribution | 236 | 51,960,143 | 88.7 | % | 96.2 | % | $ | 196,707 | 87.8 | % | |||||||||
Light Manufacturing | 47 | 5,343,067 | 9.1 | % | 97.7 | % | 20,503 | 9.1 | % | ||||||||||
Total Operating Portfolio | 283 | 57,303,210 | 97.8 | % | 96.4 | % | $ | 217,210 | 96.9 | % | |||||||||
Redevelopment | 1 | 307,315 | 0.5 | % | - | - | - | ||||||||||||
Flex/Office | 16 | 970,586 | 1.7 | % | 65.0 | % | 6,963 | 3.1 | % | ||||||||||
Total/weighted average | 300 | 58,581,111 | 100.0 | % | 95.3 | % | $ | 224,173 | 100.0 | % |
(1) | We define Occupancy Rate as the percentage of total leasable square footage for which the lease term has commenced as of the close of the reporting period. |
Location of Property | Square Feet | Buildings | Purchase Price (in thousands) | |||||||
Biddeford, ME | 265,126 | 2 | $ | 12,452 | ||||||
Fairfield, OH | 206,448 | 1 | 5,330 | |||||||
Mascot, TN | 130,560 | 1 | 4,500 | |||||||
Erlanger, KY | 108,620 | 1 | 5,600 | |||||||
Three months ended March 31, 2016 | 710,754 | 5 | $ | 27,882 | ||||||
West Chicago, IL | 249,470 | 1 | $ | 8,663 | ||||||
Visalia, CA | 635,281 | 1 | 27,921 | |||||||
Norcross, GA | 152,036 | 1 | 5,508 | |||||||
Reading, PA | 248,000 | 1 | 9,594 | |||||||
Charlotte, NC | 104,852 | 1 | 6,517 | |||||||
Three months ended June 30, 2016 | 1,389,639 | 5 | $ | 58,203 | ||||||
Columbia, SC | 185,600 | 1 | $ | 7,300 | ||||||
Graniteville, SC | 450,000 | 1 | 15,675 | |||||||
Fountain Inn, SC | 168,087 | 1 | 7,025 | |||||||
Langhorne, PA | 217,000 | 2 | 11,250 | |||||||
Warren, MI | 268,000 | 1 | 18,700 | |||||||
New Castle, DE | 485,987 | 1 | 27,500 | |||||||
Westborough, MA | 121,700 | 1 | 7,885 | |||||||
Cedar Hill, TX | 420,000 | 1 | 19,100 | |||||||
Forest Park, GA | 799,200 | 2 | 24,915 | |||||||
Rock Hill, SC | 315,520 | 1 | 9,850 | |||||||
Gardiner, ME | 265,000 | 1 | 16,800 | |||||||
Three months ended September 30, 2016 | 3,696,094 | 13 | $ | 166,000 | ||||||
Nine months ended September 30, 2016 | 5,796,487 | 23 | $ | 252,085 |
Top Ten States | Number of CBSA's(1) | % of Total Annualized Base Rental Revenue | ||||
Illinois | 2 | 7.7 | % | |||
North Carolina | 7 | 7.7 | % | |||
Ohio | 9 | 7.3 | % | |||
Pennsylvania | 7 | 7.0 | % | |||
South Carolina | 6 | 6.0 | % | |||
Texas | 4 | 5.9 | % | |||
Michigan | 5 | 5.5 | % | |||
New Jersey | 3 | 5.1 | % | |||
Tennessee | 6 | 5.0 | % | |||
Georgia | 5 | 4.5 | % | |||
Total | 54 | 61.7 | % |
Square Footage | Annualized Base Rental Revenue | ||||||||||||||||||
Operating Portfolio Market Type | Number of Buildings | Amount | % | Occupancy | Amount (in thousands) | % | |||||||||||||
Primary (greater than 200 million net rentable square feet) | 62 | 13,858,932 | 24.2 | % | 97.2 | % | $ | 54,586 | 25.1 | % | |||||||||
Secondary (25 million to 200 million net rentable square feet) | 176 | 36,416,058 | 63.5 | % | 96.6 | % | 138,615 | 63.8 | % | ||||||||||
Tertiary (less than 25 million net rentable square feet) | 45 | 7,028,220 | 12.3 | % | 93.7 | % | 24,009 | 11.1 | % | ||||||||||
Total/weighted average | 283 | 57,303,210 | 100.0 | % | 96.4 | % | $ | 217,210 | 100.0 | % |
Top Ten Tenant Industries | % of Total Annualized Base Rental Revenue | ||
Automotive | 12.5 | % | |
Air Freight & Logistics | 12.0 | % | |
Ind Equip, Component & Metals | 11.0 | % | |
Containers & Packaging | 9.7 | % | |
Food & Beverages | 9.1 | % | |
Retail | 6.7 | % | |
Personal Products | 6.5 | % | |
Household Durables | 5.1 | % | |
Building Materials | 3.8 | % | |
Non-Profit/Government | 3.8 | % | |
Total | 80.2 | % |
Top Ten Tenants | Number of Leases | % of Total Annualized Base Rental Revenue | ||||
General Services Administration | 1 | 3.1 | % | |||
XPO Logistics Supply Chain Inc | 4 | 2.2 | % | |||
Deckers Outdoor Corporation | 2 | 1.8 | % | |||
Exel Logistics | 4 | 1.7 | % | |||
Solo Cup Company | 1 | 1.7 | % | |||
International Paper Company | 3 | 1.6 | % | |||
Generation Brands | 1 | 1.2 | % | |||
Perrigo | 2 | 1.1 | % | |||
American Tire Distributors Inc | 4 | 1.0 | % | |||
Spencer Gifts | 1 | 1.0 | % | |||
Total | 23 | 16.4 | % |
Top Ten Leases | % of Total Annualized Base Rental Revenue | ||
General Service Administration | 3.1 | % | |
Solo Cup Company | 1.7 | % | |
XPO Logistics Supply Chain Inc | 1.3 | % | |
Generation Brands, LLC | 1.2 | % | |
International Paper Company | 1.1 | % | |
Deckers Outdoor Corporation | 1.1 | % | |
Spencer Gifts, LLC | 1.0 | % | |
Closetmaid Corporation | 0.9 | % | |
CareFusion 213, LLC | 0.9 | % | |
Jo-Ann Stores, LLC | 0.8 | % | |
Total | 13.1 | % |
Quarter Ended 2016 | Retention %(1) | Weighted Average Lease Term (years) | Expiring Square Feet | Renewal Square Feet(2) | Cash Rent Change | GAAP Rent Change | ||||||||||||
September 30 | 92.4 | % | 4.2 | 1,276,074 | 1,178,574 | 2.5 | % | 3.4 | % | |||||||||
June 30 | 75.4 | % | 5.0 | 921,971 | 695,395 | 5.8 | % | 9.9 | % | |||||||||
March 31 | 42.4 | % | 3.2 | 1,251,975 | 530,485 | 3.1 | % | 6.1 | % | |||||||||
Total/weighted average | 69.7 | % | 4.2 | 3,450,020 | 2,404,454 | 3.6 | % | 5.9 | % |
(1) | We define Retention as the percentage determined by taking Renewal Lease square footage commencing in the period divided by square feet of leases expiring in the period. Neither the Renewal Leases nor leases expiring include Temporary Leases or License Agreements. |
(2) | We define Renewal Square Feet as the renewal leases commencing during the period, irrespective of the date signed. |
Same Store Portfolio | Acquisitions/Dispositions | Other (1) | Total Portfolio | ||||||||||||||||||||||||||||||||||||||||||
Three months ended September 30, | Change | Three months ended September 30, | Three months ended September 30, | Three months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | $ | % | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | $ | % | ||||||||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||||||||||||||
Operating revenue | |||||||||||||||||||||||||||||||||||||||||||||
Rental income | $ | 42,419 | $ | 42,047 | $ | 372 | 0.9 | % | $ | 9,114 | $ | 3,076 | $ | 1,978 | $ | 2,608 | $ | 53,511 | $ | 47,731 | $ | 5,780 | 12.1 | % | |||||||||||||||||||||
Tenant recoveries | 6,982 | 6,543 | 439 | 6.7 | % | 1,253 | 481 | 676 | 1,039 | 8,911 | 8,063 | 848 | 10.5 | % | |||||||||||||||||||||||||||||||
Other income | 47 | 23 | 24 | 104.3 | % | 60 | 13 | 66 | 91 | 173 | 127 | 46 | 36.2 | % | |||||||||||||||||||||||||||||||
Total operating revenue | 49,448 | 48,613 | 835 | 1.7 | % | 10,427 | 3,570 | 2,720 | 3,738 | 62,595 | 55,921 | 6,674 | 11.9 | % | |||||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||||||||
Property | 8,314 | 8,647 | (333 | ) | (3.9 | )% | 1,699 | 888 | 1,245 | 1,414 | 11,258 | 10,949 | 309 | 2.8 | % | ||||||||||||||||||||||||||||||
Net operating income (2) | $ | 41,134 | $ | 39,966 | $ | 1,168 | 2.9 | % | $ | 8,728 | $ | 2,682 | $ | 1,475 | $ | 2,324 | 51,337 | 44,972 | 6,365 | 14.2 | % | ||||||||||||||||||||||||
Other expenses | |||||||||||||||||||||||||||||||||||||||||||||
General and administrative | 7,603 | 6,429 | 1,174 | 18.3 | % | ||||||||||||||||||||||||||||||||||||||||
Property acquisition costs | 1,978 | 1,006 | 972 | 96.6 | % | ||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 32,020 | 28,656 | 3,364 | 11.7 | % | ||||||||||||||||||||||||||||||||||||||||
Loss on impairments | — | 5,733 | (5,733 | ) | (100.0 | )% | |||||||||||||||||||||||||||||||||||||||
Other expenses | 279 | 226 | 53 | 23.5 | % | ||||||||||||||||||||||||||||||||||||||||
Total other expenses | 41,880 | 42,050 | (170 | ) | (0.4 | )% | |||||||||||||||||||||||||||||||||||||||
Total expenses | 53,138 | 52,999 | 139 | 0.3 | % | ||||||||||||||||||||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||||||||||||||||||
Interest income | 3 | 2 | 1 | 50.0 | % | ||||||||||||||||||||||||||||||||||||||||
Interest expense | (10,504 | ) | (9,317 | ) | (1,187 | ) | 12.7 | % | |||||||||||||||||||||||||||||||||||||
Gain on the sales of rental property | 643 | 1,713 | (1,070 | ) | (62.5 | )% | |||||||||||||||||||||||||||||||||||||||
Total other income (expense) | (9,858 | ) | (7,602 | ) | (2,256 | ) | 29.7 | % | |||||||||||||||||||||||||||||||||||||
Net loss | $ | (401 | ) | $ | (4,680 | ) | $ | 4,279 | (91.4 | )% |
(1) | Includes flex/office buildings, redevelopment buildings, and buildings classified as held for sale, which are excluded from the same store portfolio. Also includes corporate sublease rental income and asset management fee income, which are separated for purposes of calculating NOI. |
(2) | NOI for the total portfolio for the three months ended September 30, 2016 and September 30, 2015 was $51.3 million and $44.8 million, respectively. NOI for the total portfolio excludes corporate sublease rental income and asset management fee income, which is included in rental income and other income, respectively, in the table above. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. |
Same Store Portfolio | Acquisitions/Dispositions | Other (1) | Total Portfolio | ||||||||||||||||||||||||||||||||||||||||||
Nine months ended September 30, | Change | Nine months ended September 30, | Nine months ended September 30, | Nine months ended September 30, | Change | ||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | $ | % | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | $ | % | ||||||||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||||||||||||||
Operating revenue | |||||||||||||||||||||||||||||||||||||||||||||
Rental income | $ | 115,751 | $ | 114,743 | $ | 1,008 | 0.9 | % | $ | 34,531 | $ | 13,747 | $ | 6,293 | $ | 7,711 | $ | 156,575 | $ | 136,201 | $ | 20,374 | 15.0 | % | |||||||||||||||||||||
Tenant recoveries | 18,917 | 18,248 | 669 | 3.7 | % | 5,690 | 2,695 | 2,200 | 2,192 | 26,807 | 23,135 | 3,672 | 15.9 | % | |||||||||||||||||||||||||||||||
Other income | 84 | 76 | 8 | 10.5 | % | 66 | 22 | 177 | 312 | 327 | $ | 410 | (83 | ) | (20.2 | )% | |||||||||||||||||||||||||||||
Total operating revenue | 134,752 | 133,067 | 1,685 | 1.3 | % | 40,287 | 16,464 | 8,670 | 10,215 | 183,709 | 159,746 | 23,963 | 15.0 | % | |||||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||||||||
Property | 23,629 | 23,821 | (192 | ) | (0.8 | )% | 8,118 | 4,316 | 3,925 | 3,128 | 35,672 | 31,265 | 4,407 | 14.1 | % | ||||||||||||||||||||||||||||||
Net operating income (2) | $ | 111,123 | $ | 109,246 | $ | 1,877 | 1.7 | % | $ | 32,169 | $ | 12,148 | $ | 4,745 | $ | 7,087 | $ | 148,037 | $ | 128,481 | $ | 19,556 | 15.2 | % | |||||||||||||||||||||
Other expenses (income) | |||||||||||||||||||||||||||||||||||||||||||||
General and administrative | 26,373 | 21,453 | 4,920 | 22.9 | % | ||||||||||||||||||||||||||||||||||||||||
Property acquisition costs | 3,113 | 2,511 | 602 | 24.0 | % | ||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 93,318 | 82,042 | 11,276 | 13.7 | % | ||||||||||||||||||||||||||||||||||||||||
Loss on impairments | 11,231 | 8,378 | 2,853 | 34.1 | % | ||||||||||||||||||||||||||||||||||||||||
Other expenses | 857 | 892 | (35 | ) | (3.9 | )% | |||||||||||||||||||||||||||||||||||||||
Total other expenses | 134,892 | 115,276 | 19,616 | 17.0 | % | ||||||||||||||||||||||||||||||||||||||||
Total expenses | 170,564 | 146,541 | 24,023 | 16.4 | % | ||||||||||||||||||||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||||||||||||||||||
Interest income | 8 | 7 | 1 | 14.3 | % | ||||||||||||||||||||||||||||||||||||||||
Interest expense | (31,841 | ) | (26,260 | ) | (5,581 | ) | 21.3 | % | |||||||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (1,973 | ) | — | (1,973 | ) | 100.0 | % | ||||||||||||||||||||||||||||||||||||||
Gain on the sales of rental property | 21,589 | 1,713 | 19,876 | 1,160.3 | % | ||||||||||||||||||||||||||||||||||||||||
Total other income (expense) | (12,217 | ) | (24,540 | ) | 12,323 | (50.2 | )% | ||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 928 | $ | (11,335 | ) | $ | 12,263 | (108.2 | )% |
(1) | Includes flex/office buildings, redevelopment buildings, and buildings classified as held for sale, which are excluded from the same store portfolio. Also includes corporate sublease rental income and asset management fee income, which are separated for purposes of calculating NOI. |
(2) | NOI for the total portfolio for the nine months ended September 30, 2016 and September 30, 2015 was $147.9 million and $128.0 million, respectively. NOI for the total portfolio excludes corporate sublease rental income and asset management fee income, which is included in rental income and other income, respectively, in the table above. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
Reconciliation of Net Income (Loss) to FFO (in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | (401 | ) | $ | (4,680 | ) | $ | 928 | $ | (11,335 | ) | |||||
Rental property depreciation and amortization | 31,947 | 28,610 | 93,130 | 81,910 | ||||||||||||
Loss on impairments | — | 5,733 | 11,231 | 8,378 | ||||||||||||
Gain on the sales of rental property, net | (643 | ) | (1,713 | ) | (21,589 | ) | (1,713 | ) | ||||||||
FFO | 30,903 | 27,950 | $ | 83,700 | $ | 77,240 | ||||||||||
Preferred stock dividends | (4,001 | ) | (2,712 | ) | (10,914 | ) | (8,136 | ) | ||||||||
Amount allocated to participating securities | (95 | ) | (95 | ) | (289 | ) | (291 | ) | ||||||||
FFO attributable to common stockholders and unit holders | $ | 26,807 | $ | 25,143 | $ | 72,497 | $ | 68,813 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
Reconciliation of Net Income (Loss) to NOI (in thousands) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | (401 | ) | $ | (4,680 | ) | $ | 928 | $ | (11,335 | ) | |||||
Asset management fee income | (60 | ) | (87 | ) | (166 | ) | (302 | ) | ||||||||
General and administrative | 7,603 | 6,429 | 26,373 | 21,453 | ||||||||||||
Property acquisition costs | 1,978 | 1,006 | 3,113 | 2,511 | ||||||||||||
Depreciation and amortization | 32,020 | 28,656 | 93,318 | 82,042 | ||||||||||||
Interest income | (3 | ) | (2 | ) | (8 | ) | (7 | ) | ||||||||
Interest expense | 10,504 | 9,317 | 31,841 | 26,260 | ||||||||||||
Loss on impairments | — | 5,733 | 11,231 | 8,378 | ||||||||||||
Loss on extinguishment of debt | — | — | 1,973 | — | ||||||||||||
Other expenses | 279 | 226 | 857 | 892 | ||||||||||||
Gain on the sales of rental property, net | (643 | ) | (1,713 | ) | (21,589 | ) | (1,713 | ) | ||||||||
Corporate sublease rental income | — | (85 | ) | — | (187 | ) | ||||||||||
Net operating income | $ | 51,277 | $ | 44,800 | $ | 147,871 | $ | 127,992 |
Nine months ended September 30, | Change | ||||||||||||||
Cash Flows (dollars in thousands) | 2016 | 2015 | $ | % | |||||||||||
Net cash provided by operating activities | $ | 97,905 | $ | 90,057 | $ | 7,848 | 8.7 | % | |||||||
Net cash used in investing activities | $ | 220,016 | $ | 244,859 | $ | (24,843 | ) | (10.1 | )% | ||||||
Net cash provided by financing activities | $ | 122,373 | $ | 143,420 | $ | (21,047 | ) | (14.7 | )% |
Month Ended 2016 | Declaration Date | Record Date | Per Share | Payment Date | ||||||
December 31 | August 1, 2016 | December 30, 2016 | $ | 0.115833 | January 17, 2017 | |||||
November 30 | August 1, 2016 | November 30, 2016 | 0.115833 | December 15, 2016 | ||||||
October 31 | August 1, 2016 | October 31, 2016 | 0.115833 | November 15, 2016 | ||||||
September 30 | May 2, 2016 | September 30, 2016 | 0.115833 | October 17, 2016 | ||||||
August 31 | May 2, 2016 | August 31, 2016 | 0.115833 | September 15, 2016 | ||||||
July 31 | May 2, 2016 | July 29, 2016 | 0.115833 | August 15, 2016 | ||||||
June 30 | February 22, 2016 | June 30, 2016 | 0.115833 | July 15, 2016 | ||||||
May 31 | February 22, 2016 | May 31, 2016 | 0.115833 | June 15, 2016 | ||||||
April 30 | February 22, 2016 | April 29, 2016 | 0.115833 | May 16, 2016 | ||||||
March 31 | October 22, 2015 | March 31, 2016 | 0.115833 | April 15, 2016 | ||||||
February 29 | October 22, 2015 | February 29, 2016 | 0.115833 | March 15, 2016 | ||||||
January 31 | October 22, 2015 | January 29, 2016 | 0.115833 | February 16, 2016 | ||||||
Total | $ | 1.389996 |
Quarter Ended 2016 | Declaration Date | Series A Preferred Stock Per Share | Series B Preferred Stock Per Share | Series C Preferred Stock Per Share | Payment Date | |||||||||||
September 30 | August 1, 2016 | $ | 0.5625 | $ | 0.4140625 | $ | 0.4296875 | September 30, 2016 | ||||||||
June 30 | May 2, 2016 | 0.5625 | 0.4140625 | 0.4965300 | (1) | June 30, 2016 | ||||||||||
March 31 | February 22, 2016 | 0.5625 | 0.4140625 | — | March 31, 2016 | |||||||||||
Total | $ | 1.6875 | $ | 1.2421875 | $ | 0.9262175 |
(1) | Represents the period from March 17, 2016 through June 30, 2016. |
Loan | Principal Outstanding as of September 30, 2016 | Interest Rate (1) | Current Maturity | Prepayment Terms (2) | |||||||
Unsecured credit facility: | |||||||||||
Unsecured Credit Facility (3) | $ | 129,000 | L + 1.15% | Dec-18-2019 | i | ||||||
Total unsecured credit facility | 129,000 | ||||||||||
Unsecured term loans: | |||||||||||
Unsecured Term Loan C (4) | — | L + 1.30% | Sep-29-2020 | i | |||||||
Unsecured Term Loan B | 150,000 | L + 1.70% | Mar-21-2021 | ii | |||||||
Unsecured Term Loan A | 150,000 | L + 1.65% | Mar-31-2022 | ii | |||||||
Total unsecured term loans | 300,000 | ||||||||||
Less: Total unamortized deferred financing fees and debt issuance costs | (2,968 | ) | |||||||||
Total carrying value unsecured term loans | 297,032 | ||||||||||
Unsecured notes: | |||||||||||
Series F Unsecured Notes | 100,000 | 3.98 | % | Jan-05-2023 | ii | ||||||
Series A Unsecured Notes | 50,000 | 4.98 | % | Oct-1-2024 | ii | ||||||
Series D Unsecured Notes | 100,000 | 4.32 | % | Feb-20-2025 | ii | ||||||
Series B Unsecured Notes | 50,000 | 4.98 | % | Jul-1-2026 | ii | ||||||
Series C Unsecured Notes | 80,000 | 4.42 | % | Dec-30-2026 | ii | ||||||
Series E Unsecured Notes | 20,000 | 4.42 | % | Feb-20-2027 | ii | ||||||
Total unsecured notes | 400,000 | ||||||||||
Less: Total unamortized deferred financing fees and debt issuance costs | (2,091 | ) | |||||||||
Total carrying value unsecured notes | 397,909 | ||||||||||
Mortgage notes (secured debt): | |||||||||||
Union Fidelity Life Insurance Co. | 5,478 | 5.81 | % | Apr-30-2017 | iv | ||||||
Principal Life Insurance Company | 5,527 | 5.73 | % | May-05-2017 | iii | ||||||
Webster Bank, National Association | 2,877 | 3.66 | % | May-29-2017 | iii | ||||||
Webster Bank, National Association | 3,098 | 3.64 | % | May-31-2017 | iii | ||||||
Wells Fargo, National Association | 4,061 | 5.90 | % | Aug-1-2017 | v | ||||||
Connecticut General Life Insurance Company-1 Facility | 56,474 | 6.50 | % | Feb-1-2018 | vi | ||||||
Connecticut General Life Insurance Company-2 Facility | 46,920 | 5.75 | % | Feb-1-2018 | vi | ||||||
Connecticut General Life Insurance Company-3 Facility | 16,207 | 5.88 | % | Feb-1-2018 | vi | ||||||
Wells Fargo Bank, National Association CMBS Loan | 57,007 | 4.31 | % | Dec-1-2022 | vii | ||||||
Thrivent Financial for Lutherans | 4,037 | 4.78 | % | Dec-15-2023 | iii | ||||||
Total mortgage notes | 201,686 | ||||||||||
Add: Total unamortized fair market value premiums | 222 | ||||||||||
Less: Total unamortized deferred financing fees and debt issuance costs | (1,053 | ) | |||||||||
Total carrying value mortgage notes | 200,855 | ||||||||||
Total / weighted average interest rate (5) | $ | 1,024,796 | 4.03 | % |
(1) | Current interest rate as of September 30, 2016. At September 30, 2016, the one-month LIBOR (“L”) was 0.53111%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on our consolidated leverage ratio, as defined in the respective loan agreements. |
(2) | Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date; (iv) pre-payable without penalty two months prior to the maturity date; (v) pre-payable without penalty three months prior to the maturity date, however can be defeased; (vi) pre-payable without penalty six months prior to the maturity date; and (vii) pre-payable without penalty three months prior to the maturity date, however can be defeased beginning January 1, 2016. |
(3) | The capacity of the unsecured credit facility is $450.0 million. |
(4) | Capacity of $150.0 million, which we have until December 29, 2016 to draw. |
(5) | The weighted average interest rate was calculated using the fixed interest rate swapped on the current notional amount of $450.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. |
Debt Capital Structure | September 30, 2016 | |||
Total principal outstanding (in thousands) | $ | 1,030,686 | ||
Weighted average duration (years) | 5.7 | |||
% Secured debt | 20 | % | ||
% Debt maturing next 12 months | 2 | % | ||
Net Debt to Real Estate Cost Basis (1) | 43 | % |
(1) | We define Net Debt is defined as our amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes, less cash and cash equivalents. We define Real Estate Cost Basis as the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization. |
Preferred Stock Issuances | Issuance Date | Number of Shares | Price and Liquidation Value Per Share | Interest Rate | ||||||||
Series A Cumulative Redeemable Preferred Stock | November 2, 2011 | 2,760,000 | $ | 25.00 | 9.000 | % | ||||||
Series B Cumulative Redeemable Preferred Stock | April 16, 2013 | 2,800,000 | $ | 25.00 | 6.625 | % | ||||||
Series C Cumulative Redeemable Preferred Stock | March 17, 2016 | 3,000,000 | $ | 25.00 | 6.875 | % |
ATM Stock Offering Program | Date | Maximum Aggregate Offering Price (in thousands) | Aggregate Common Stock Available as of September 30, 2016 (in thousands) | |||||||
2016 $200 million ATM | May 13, 2016 | $ | 200,000 | $ | 99,286 |
Nine months ended September 30, 2016 | |||||||||||||||||||
ATM Stock Offering Program | Shares Sold | Weighted Average Price Per Share | Gross Proceeds | Sales Agents’ Fee | Net Proceeds | ||||||||||||||
2016 $200 million ATM | 4,201,500 | $ | 23.97 | $ | 100,714 | $ | 1,511 | $ | 99,203 | ||||||||||
Total/weighted average | 4,201,500 | $ | 23.97 | $ | 100,714 | $ | 1,511 | $ | 99,203 |
Year | Future Amortization of Non-cash Compensation Expense (in thousands) | |||
Remainder of 2016 | $ | 1,957 | ||
2017 | $ | 6,902 | ||
2018 | $ | 3,215 | ||
2019 | $ | 1,646 | ||
2020 | $ | 340 |
Interest Rate Derivative Counterparty | Trade Date | Effective Date | Notional Amount (in thousands) | Fair Value (in thousands) | Pay Fixed Interest Rate | Receive Variable Interest Rate | Maturity Date | ||||||||||||
PNC Bank, N.A. | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
Bank of America, N.A. | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
UBS AG | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
Royal Bank of Canada | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7945 | % | One-month L | Sep-10-2017 | ||||||||
RJ Capital Services, Inc. | Sep-14-2012 | Oct-10-2012 | $ | 10,000 | $ | (12 | ) | 0.7975 | % | One-month L | Sep-10-2017 | ||||||||
Bank of America, N.A. | Sep-20-2012 | Oct-10-2012 | $ | 25,000 | $ | (19 | ) | 0.7525 | % | One-month L | Sep-10-2017 | ||||||||
RJ Capital Services, Inc. | Sep-24-2012 | Oct-10-2012 | $ | 25,000 | $ | (13 | ) | 0.7270 | % | One-month L | Sep-10-2017 | ||||||||
Regions Bank | Mar-01-2013 | Mar-01-2013 | $ | 25,000 | $ | (376 | ) | 1.3300 | % | One-month L | Feb-14-2020 | ||||||||
Capital One, N.A. | Jun-13-2013 | Jul-01-2013 | $ | 50,000 | $ | (1,335 | ) | 1.6810 | % | One-month L | Feb-14-2020 | ||||||||
Capital One, N.A. | Jun-13-2013 | Aug-01-2013 | $ | 25,000 | $ | (686 | ) | 1.7030 | % | One-month L | Feb-14-2020 | ||||||||
Regions Bank | Sep-30-2013 | Feb-03-2014 | $ | 25,000 | $ | (928 | ) | 1.9925 | % | One-month L | Feb-14-2020 | ||||||||
The Toronto-Dominion Bank | Oct-14-2015 | Sep-29-2016 | $ | 25,000 | $ | (453 | ) | 1.3830 | % | One-month L | Sep-29-2020 | ||||||||
PNC Bank, N.A. | Oct-14-2015 | Sep-29-2016 | $ | 50,000 | $ | (921 | ) | 1.3906 | % | One-month L | Sep-29-2020 | ||||||||
Regions Bank | Oct-14-2015 | Sep-29-2016 | $ | 35,000 | $ | (641 | ) | 1.3858 | % | One-month L | Sep-29-2020 | ||||||||
U.S. Bank, N.A. | Oct-14-2015 | Sep-29-2016 | $ | 25,000 | $ | (464 | ) | 1.3950 | % | One-month L | Sep-29-2020 | ||||||||
Capital One, N.A. | Oct-14-2015 | Sep-29-2016 | $ | 15,000 | $ | (279 | ) | 1.3950 | % | One-month L | Sep-29-2020 | ||||||||
Royal Bank of Canada | Jan-08-2015 | Mar-20-2015 | $ | 25,000 | $ | (827 | ) | 1.7090 | % | One-month L | Mar-21-2021 | ||||||||
The Toronto-Dominion Bank | Jan-08-2015 | Mar-20-2015 | $ | 25,000 | $ | (828 | ) | 1.7105 | % | One-month L | Mar-21-2021 | ||||||||
The Toronto-Dominion Bank | Jan-08-2015 | Sep-10-2017 | $ | 100,000 | $ | (4,074 | ) | 2.2255 | % | One-month L | Mar-21-2021 | ||||||||
Wells Fargo Bank, N.A. | Jan-08-2015 | Mar-20-2015 | $ | 25,000 | $ | (1,064 | ) | 1.8280 | % | One-month L | Mar-31-2022 | ||||||||
The Toronto-Dominion Bank | Jan-08-2015 | Feb-14-2020 | $ | 25,000 | $ | (577 | ) | 2.4535 | % | One-month L | Mar-31-2022 | ||||||||
Regions Bank | Jan-08-2015 | Feb-14-2020 | $ | 50,000 | $ | (1,179 | ) | 2.4750 | % | One-month L | Mar-31-2022 | ||||||||
Capital One, N.A. | Jan-08-2015 | Feb-14-2020 | $ | 50,000 | $ | (1,229 | ) | 2.5300 | % | One-month L | Mar-31-2022 |
Exhibit Number | Description of Document | |
31.1 * | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 * | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 * | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 * | The following materials from STAG Industrial, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to Consolidated Financial Statements |
* | Filed herewith. |
STAG INDUSTRIAL, INC. | ||
Date: November 3, 2016 | BY: | /s/ WILLIAM R. CROOKER |
William R. Crooker | ||
Chief Financial Officer, Executive Vice President and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit Number | Description of Document | |
31.1 * | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 * | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 * | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 * | The following materials from STAG Industrial, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) related notes to Consolidated Financial Statements |
* | Filed herewith. |
1. | I have reviewed this quarterly report on Form 10-Q of STAG Industrial, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 3, 2016 | /s/ BENJAMIN S. BUTCHER |
Benjamin S. Butcher Chairman, Chief Executive Officer and President |
1. | I have reviewed this quarterly report on Form 10-Q of STAG Industrial, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 3, 2016 | /s/ WILLIAM R. CROOKER |
William R. Crooker Chief Financial Officer, Executive Vice President and Treasurer |
(1) | the Report, containing the financial statements, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of STAG Industrial, Inc. |
Date: November 3, 2016 | /s/ BENJAMIN S. BUTCHER |
Benjamin S. Butcher Chairman, Chief Executive Officer and President | |
/s/ WILLIAM R. CROOKER | |
William R. Crooker Chief Financial Officer, Executive Vice President and Treasurer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 02, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | STAG Industrial, Inc. | |
Entity Central Index Key | 0001479094 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 75,588,466 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
Consolidated Statements of Comprehensive Income (Loss) - 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 (loss) | $ (401) | $ (4,680) | $ 928 | $ (11,335) |
Other comprehensive income (loss): | ||||
Income (loss) on interest rate swaps | 2,863 | (7,636) | (14,028) | (7,019) |
Other comprehensive income (loss) | 2,863 | (7,636) | (14,028) | (7,019) |
Comprehensive income (loss) | 2,462 | (12,316) | (13,100) | (18,354) |
Net loss attributable to noncontrolling interest after preferred stock dividends | 216 | 359 | 505 | 951 |
Other comprehensive (income) loss attributable to noncontrolling interest | (140) | 371 | 709 | 343 |
Comprehensive income (loss) attributable to STAG Industrial, Inc. | $ 2,538 | $ (11,586) | $ (11,886) | $ (17,060) |
Organization and Description of Business |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business STAG Industrial, Inc. (the “Company”) is an industrial real estate operating company focused on the acquisition and operation of single-tenant, industrial properties throughout the United States. The Company was formed as a Maryland corporation and has elected to be treated and intends to continue to qualify as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). The Company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns substantially all of its assets and conducts substantially all of its business through its operating partnership, STAG Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). As of September 30, 2016 and December 31, 2015, the Company owned a 95.2% and 95.1%, respectively, common equity interest in the Operating Partnership. The Company, through its wholly owned subsidiary, is the sole general partner of the Operating Partnership. As used herein, the “Company” refers to STAG Industrial, Inc. and its consolidated subsidiaries and partnerships, including the Operating Partnership, except where context otherwise requires. As of September 30, 2016, the Company owned 300 buildings in 37 states with approximately 58.6 million rentable square feet, consisting of 236 warehouse/distribution buildings, 47 light manufacturing buildings, 16 flex/office buildings, and one building in redevelopment. The Company’s buildings were approximately 95.3% leased to 262 tenants as of September 30, 2016. |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Interim Financial Information The accompanying interim financial statements have been presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements include all adjustments, consisting of normal recurring items, necessary for their fair statement in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Basis of Presentation The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership and their subsidiaries. Interests in the Operating Partnership not owned by the Company are referred to as “Noncontrolling Common Units.” These Noncontrolling Common Units are held by other limited partners in the form of common units ("Other Common Units") and long term incentive plan units (“LTIP units”) issued pursuant to the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended (the “2011 Plan”). All significant intercompany balances and transactions have been eliminated in the consolidation of entities. The financial statements of the Company are presented on a consolidated basis for all periods presented. New Accounting Pronouncements In August of 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides clarified guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company has elected to early adopt this standard effective July 1, 2016, and the effects of this standard were applied retrospectively to all prior periods presented. The effect of the change in accounting principle was an increase in net cash provided by operating activities of approximately $2.0 million for the six months ended June 30, 2016 and a corresponding increase in net cash used in financing activities for the six months ended June 30, 2016 related to the payment of loan prepayment fees and costs. In March of 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718), which addresses certain aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flow. This standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. The Company has elected to early adopt this standard effective January 1, 2016. As a result, the Company's policy is to recognize forfeitures in the period which they occur, whereas the former guidance required the Company to estimate expected forfeitures. The adoption of this standard did not have a material effect on the consolidated financial statements. In February of 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 is expected to impact the Company’s consolidated financial statements as the Company has certain operating and land lease arrangements for which it is the lessee. Topic 842 supersedes the previous leases standard, Topic 840, Leases. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new standard must be adopted using a modified retrospective transition and will require application of the new guidance at the beginning of the earliest comparative period. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on the Company’s financial position or results of operations. In April of 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30). ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability. In August of 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Subtopic 835-30), which clarified that debt issuance costs related to line-of-credit arrangements may be presented as an asset and amortized over the term of the line-of-credit arrangement regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this standard effective January 1, 2016. As a result, debt issuance costs related to the debt liabilities that are not line-of-credit arrangements are included as a direct deduction from the related debt liability and those related to line-of-credit arrangements continue to be included as an asset within prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The effects of this standard were applied retrospectively to all prior periods presented. The effect of the change in accounting principle was the reduction of unsecured term loans by approximately $3.4 million, unsecured notes by approximately $2.3 million, and mortgage notes by approximately $1.3 million and a corresponding reduction of prepaid expenses and other assets by approximately $6.9 million as of December 31, 2015. In February of 2015, the FASB issued ASU 2015-02, Amendments to Consolidation Analysis (Topic 810), which amends the current consolidation model. On January 1, 2016, the Company adopted this standard, modifying the analysis it must perform to determine whether it should consolidate certain types of legal entities. The guidance does not amend the existing disclosure requirements for variable interest entities or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, the Operating Partnership will be a variable interest entity of the Company. As the Operating Partnership is already consolidated in the financial statements of the Company, the identification of this entity as a variable interest entity had no impact on the consolidated financial statements of the Company. There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption. In addition, there were no voting interest entities under prior existing guidance determined to be variable interest entities under the revised guidance. In January of 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is effective for the annual periods beginning after December 31, 2017 and for annual periods and interim periods within those years. Early adoption is permitted for all financial statements of fiscal years and interim periods that have not yet been issued. The adoption of ASU 2016-01 is not expected to materially impact the Company’s consolidated financial statements. In August of 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. ASU 2014-15 is effective for the annual period ending December 31, 2016 and for annual periods and interim periods thereafter with early adoption permitted. The adoption of ASU 2014-15 is not expected to materially impact the Company’s consolidated financial statements. In May of 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. Revenue from a lease contract with a tenant is not within the scope of this revenue standard. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted for the first interim period within annual reporting periods beginning after December 15, 2016. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations. Rental Property The Company capitalizes costs directly and indirectly related to the development, pre-development, redevelopment, or improvement of rental property. Real estate taxes, compensation costs of development personnel, insurance, interest, and other directly related costs during construction periods are capitalized as incurred and depreciated commencing with the date the property is substantially completed. Such costs begin to be capitalized to the development projects from the point the Company is undergoing the necessary activities to get the development ready for its intended use and cease when the development projects are substantially completed and held available for occupancy. Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rate of the Company's unsecured indebtedness during the period. Tenant Accounts Receivable, net Tenant accounts receivable, net on the accompanying Consolidated Balance Sheets includes both tenant accounts receivable, net and accrued rental income, net. The Company provides an allowance for doubtful accounts against the portion of tenant accounts receivable that is estimated to be uncollectible. As of September 30, 2016 and December 31, 2015, the Company had an allowance for doubtful accounts of approximately $0.1 million and $0.1 million, respectively. The Company accrues rental income earned, but not yet receivable, in accordance with GAAP. As of September 30, 2016 and December 31, 2015, the Company had accrued rental income of approximately $17.7 million and $16.1 million, respectively. The Company maintains an allowance for estimated losses that may result from those revenues. As of September 30, 2016 and December 31, 2015, the Company had an allowance on accrued rental income of $0 and $0, respectively. As of September 30, 2016 and December 31, 2015, the Company had approximately $6.9 million and $6.1 million, respectively, of total lease security deposits available in the form of existing letters of credit, which are not reflected on the accompanying Consolidated Balance Sheets. As of September 30, 2016 and December 31, 2015, the Company had approximately $4.3 million and $4.1 million, respectively, of lease security deposits available in cash, which are included in cash and cash equivalents on the accompanying Consolidated Balance Sheets, and approximately $0.4 million and $0.4 million, respectively, of lease security deposits available in cash, which are included in restricted cash on the accompanying Consolidated Balance Sheets. These funds may be used to settle tenant accounts receivables in the event of a default under the related lease. As of September 30, 2016 and December 31, 2015, the Company's total liability associated with these lease security deposits was approximately $4.7 million and $4.5 million, respectively, and is included in tenant prepaid rent and security deposits on the accompanying Consolidated Balance Sheets. Related Parties As of September 30, 2016 and December 31, 2015, the Company had approximately $0.1 million and $0.1 million, respectively, of amounts due from related parties, which are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. Revenue Recognition Tenant Recoveries By the terms of their leases, certain tenants are obligated to pay directly the costs of their properties’ insurance, real estate taxes, ground lease payments, and certain other expenses, and these costs are not reflected on the Company’s consolidated financial statements. The Company does not recognize recovery revenue related to leases where the tenant has assumed the cost for real estate taxes, insurance, ground lease payments and certain other expenses. To the extent any tenant responsible for these costs under its respective lease defaults on its lease or it is deemed probable that the tenant will fail to pay for such costs, the Company will record a liability for such obligation. The Company estimates that real estate taxes, which are the responsibility of these certain tenants, were approximately $2.7 million, $7.9 million, $2.7 million and $7.8 million for the three and nine months ended September 30, 2016 and September 30, 2015, respectively. These amounts would have been the maximum real estate tax expense of the Company, excluding any penalties or interest, had the tenants not met their contractual obligations for these periods. Termination Income On October 20, 2015, the tenant at the Dayton, OH property exercised its early lease termination option per the terms of the lease agreement. The option provided that the tenant's lease terminate effective October 31, 2016 and required the tenant to pay a termination fee of approximately $0.2 million. The termination fee was being recognized on a straight-line basis from October 20, 2015 through the relinquishment of the space on October 31, 2016. On August 29, 2016, the Company sold the Dayton, OH property to an unaffiliated third party and recognized the remaining unamortized termination fee. The termination fee income of approximately $0.1 million and $0.2 million is included in rental income on the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2016, respectively. Taxes Federal Income Taxes The Company elected to be taxed as a REIT under the Code commencing with its taxable year ended December 31, 2011 and intends to continue to qualify as a REIT. The Company is generally not subject to corporate level income tax on the earnings distributed currently to its stockholders that it derives from its REIT qualifying activities. As a REIT, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. The Company will not be required to make distributions with respect to income derived from the activities conducted through subsidiaries that the Company elects to treat as taxable REIT subsidiaries (“TRS”) for federal income tax purposes, nor will it have to comply with income, assets, or ownership restrictions inside of the TRS. Certain activities that the Company undertakes must or should be conducted by a TRS, such as performing non-customary services for its tenants and holding assets that it cannot hold directly. A TRS is subject to federal and state income taxes. On June 24, 2016, the Operating Partnership, through its wholly owned subsidiary, transferred a vacant land parcel located in Burlington, NJ to the Company's TRS. The Company's TRS recognized a net loss of approximately $0.1 million, $0.1 million, $7,000 and $7,000, for the three and nine months ended September 30, 2016 and September 30, 2015, respectively, which has been included on the accompanying Consolidated Statements of Operations. State and Local Income, Excise, and Franchise Tax The Company and certain of its subsidiaries are subject to certain state and local income, excise, and franchise taxes. Taxes in the amount of $0.2 million, $0.7 million, $0.2 million and $0.8 million have been recorded in other expenses on the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and September 30, 2015, respectively. Uncertain Tax Positions Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained based solely on its technical merits, with the taxing authority having full knowledge of all relevant information. The measurement of a tax benefit for an uncertain tax position that meets the “more likely than not” threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information. As of September 30, 2016 and December 31, 2015, there were no liabilities for uncertain tax positions. Concentrations of Credit Risk Concentrations of credit risk relevant to the Company may arise when a number of financing arrangements, including revolving credit facilities or derivatives, are entered into with the same lenders or counterparties, and have similar economic features that would cause their inability to meet contractual obligations. The Company mitigates the concentration of credit risk as it relates to financing arrangements by entering into loan syndications with multiple, reputable financial institutions and diversifying its debt counterparties. The Company also reduces exposure by diversifying its derivatives across multiple counterparties who meet established credit and capital guidelines. Concentration of credit risk may also arise when the Company enters into leases with multiple tenants concentrated in the same industry, or into a significant lease or multiple leases with a single tenant, or tenants are located in the same geographic region, or have similar economic features that would cause their inability to meet contractual obligations, including those to the Company, to be similarly affected. The Company regularly monitors its tenant base to assess potential concentrations of credit risk through financial statement review, tenant management calls, and press releases. Management believes the current credit risk portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk. |
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Rental Property | Rental Property The following table summarizes the components of rental property as of September 30, 2016 and December 31, 2015.
Acquisitions The following table summarizes the acquisitions of the Company during the three and nine months ended September 30, 2016.
The following table summarizes the allocation of the consideration paid at the date of acquisition during the nine months ended September 30, 2016 for the acquired assets and liabilities in connection with the acquisitions identified in the table above.
On September 29, 2016, the Company assumed a mortgage note of approximately $4.0 million in connection with the acquisition of the property located in Rock Hill, SC. For a discussion of the method used to determine the fair value of the mortgage note, see Note 4. The table below sets forth the results of operations for three and nine months ended September 30, 2016, for the properties acquired during the nine months ended September 30, 2016, included in the Company’s Consolidated Statements of Operations from the date of acquisition.
The following tables set forth pro forma information for the nine months ended September 30, 2016 and September 30, 2015. The below pro forma information does not purport to represent what the actual results of operations of the Company would have been had the acquisitions outlined above occurred on the first day of the applicable reporting period, nor do they purport to predict the results of operations of future periods. The pro forma information has not been adjusted for property sales.
Dispositions During the nine months ended September 30, 2016, the Company sold 14 buildings comprised of approximately 2.0 million square feet with a net book value of approximately $28.7 million to third parties. These buildings contributed approximately $2.5 million to revenue and approximately $0.4 million to net income (exclusive of loss on impairments, loss on extinguishment of debt, and gain on the sales of rental property, net) for the nine months ended September 30, 2016. Net proceeds from the sales of rental property were approximately $50.3 million and the Company recognized a gain on the sales of rental property, net of approximately $21.6 million for the nine months ended September 30, 2016. All of the dispositions were accounted for under the full accrual method. Assets Held for Sale As of September 30, 2016, the related land, building and improvements, net, and deferred leasing intangibles, net, for one property located in Pittsburgh, PA was classified as assets held for sale, net on the accompanying Consolidated Balance Sheets. Loss on Impairments The following table summarizes the Company's loss on impairments for assets held and used during the three and nine months ended September 30, 2016.
Involuntary Conversion On September 1, 2016, the Company recorded an estimated loss on involuntary conversion of approximately $2.2 million for the three and nine months ended September 30, 2016. The Company's insurance policy provides coverage for these losses, and accordingly the loss on involuntary conversion was fully offset by the expected insurance proceeds for the three and nine months ended September 30, 2016. As of September 30, 2016, the remaining proceeds receivable from the insurance company are estimated to be approximately $1.7 million, which are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. Deferred Leasing Intangibles The following table summarizes the deferred leasing intangibles on the accompanying Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015.
The following table sets forth the amortization expense and the net decrease to rental revenue for the amortization of deferred leasing intangibles during the three and nine months ended September 30, 2016 and September 30, 2015.
The following table sets forth the amortization of deferred leasing intangibles over the next five years as of September 30, 2016.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The following table sets forth a summary of the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes and mortgage notes as of September 30, 2016 and December 31, 2015.
The aggregate undrawn nominal commitments on the combined unsecured credit facility and unsecured term loans as of September 30, 2016 was approximately $467.5 million. The Company's actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on the Company's debt covenant compliance. Total accrued interest for the Company's indebtedness was $5.3 million and $3.8 million as of September 30, 2016 and December 31, 2015, respectively, and is included in accounts payable, accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets. Deferred financing fees and debt issuance costs, net of accumulated amortization included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets were approximately $2.4 million and $3.0 million as of September 30, 2016 and December 31, 2015, respectively. Deferred financing fees and debt issuance costs, net of accumulated amortization included as a direct deduction from the related debt liability on the accompanying Consolidated Balance Sheets were approximately $6.1 million and $6.9 million as of September 30, 2016 and December 31, 2015, respectively. For the three and nine months ended September 30, 2016 and September 30, 2015, amortization of deferred financing fees and debt issuance costs included in interest expense was approximately $0.5 million, $1.4 million, $0.4 million and $1.1 million, respectively. On September 29, 2016, the Company assumed a mortgage note with Thrivent Financial for Lutherans of approximately $4.0 million in connection with the acquisition of the property located in Rock Hill, SC, which serves as collateral for the debt. The debt matures on December 15, 2023 and bears interest at 4.78% per annum. The assumed debt was recorded at fair value and a fair value premium of approximately $0.1 million was recorded. The fair value of debt was determined by discounting the future cash flows using the current rate of approximately 4.45% at which loans would be made to borrowers with similar credit ratings for loans with similar remaining maturities, similar terms, and similar loan-to-value ratios. The fair value of the debt is based on Level 3 inputs and is a nonrecurring fair value measurement. On June 22, 2016, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeased in the amount of approximately $1.5 million in connection with the sale of the Gloversville, NY property which had served as partial collateral for the mortgage note. The associated defeasance fees and unamortized deferred financing fees and debt issuance costs of approximately $0.3 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations for the nine months ended September 30, 2016. On May 18, 2016, the mortgage note held with National Life Insurance Company, in which the property located in Charlotte, NC served as collateral for the mortgage note, was paid in full. On May 5, 2016, the mortgage note held with Webster Bank National Association, in which the property located in Norton, MA served as collateral for the mortgage note, was paid in full. On April 26, 2016, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeased in the amount of approximately $1.7 million in connection with the sale of the Parsons, KS property which had served as partial collateral for the mortgage note. The associated defeasance fees and unamortized deferred financing fees and debt issuance costs of approximately $0.2 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations for the nine months ended September 30, 2016. On April 26, 2016, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeased in the amount of approximately $1.8 million in connection with the sale of the Kansas City, KS property which had served as partial collateral for the mortgage note. The associated defeasance fees and unamortized deferred financing fees and debt issuance costs of approximately $0.3 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations for the nine months ended September 30, 2016. On March 17, 2016, the mortgage note held with Connecticut General Life Insurance Company (Facility 2) was partially paid in the amount of approximately $10.5 million in connection with the sale of the Gresham, OR property which had served as partial collateral for the mortgage note. The prepayment fees and associated unamortized deferred financing fees and debt issuance costs of approximately $0.9 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations during the nine months ended September 30, 2016. On March 3, 2016, the mortgage note held with Wells Fargo, National Association (CMBS loan) was partially defeased in the amount of approximately $1.2 million in connection with the sale of the Wichita, KS property which had served as partial collateral for the mortgage note. The associated defeasance fees and unamortized deferred financing fees and debt issuance costs of approximately $0.2 million were written off to loss on extinguishment of debt in the accompanying Consolidated Statement of Operations during the nine months ended September 30, 2016. On March 1, 2016 the mortgage note held with Sun Life Assurance Company of Canada (U.S.), in which the property located in Gahanna, OH served as collateral for the mortgage note, was paid in full. Financial Covenant Considerations The Company’s ability to borrow under the unsecured credit facility and the unsecured term loans are subject to its ongoing compliance with a number of financial and other covenants. The Company's unsecured notes and mortgage notes also contain financial and other covenants. The Company was in compliance with all such applicable restrictions and financial covenants as of September 30, 2016 and December 31, 2015. In the event of a default under the unsecured credit facility or the unsecured term loans, the Company’s dividend distributions are limited to the minimum amount necessary for the Company to maintain its status as a REIT. The real estate net book value of the properties that are collateral for the Company’s debt arrangements was approximately $261.2 million and $268.8 million at September 30, 2016 and December 31, 2015, respectively, and is limited to senior, property-level secured debt financing arrangements. Fair Value of Debt The fair value of the Company’s debt was determined by discounting the future cash flows using the current rates at which loans would be made to borrowers with similar credit ratings for loans with similar remaining maturities, similar terms, and similar loan-to-value ratios. The discount rates ranged from approximately 1.73% to 4.45% and 1.58% to 4.82% at September 30, 2016 and December 31, 2015, respectively, and were applied to each individual debt instrument. The applicable fair value guidance establishes a three tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The fair value of the Company’s debt is based on Level 3 inputs. The following table presents the aggregate principal outstanding of the Company’s debt and the corresponding estimate of fair value as of September 30, 2016 and December 31, 2015 (in thousands).
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Use of Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Derivative Financial Instruments | Use of Derivative Financial Instruments Risk Management Objective of Using Derivatives The Company’s use of derivative instruments is limited to the utilization of interest rate swaps to manage interest rate risk exposure on existing and future liabilities and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and related costs associated with the Company’s operating and financial structure. The following table details the Company’s outstanding interest rate swaps as of September 30, 2016.
The fair value of the interest rate swaps outstanding as of September 30, 2016 and December 31, 2015 was as follows.
Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. The Company uses interest rate swaps to fix the rate of its long term variable rate debt. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and qualified as cash flow hedges is recorded in accumulated other comprehensive income (loss) and will be reclassified to interest expense in the period that the hedged forecasted transaction affects earnings on the Company’s variable rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings into interest expense. During the three and nine months ended September 30, 2016 and September 30, 2015, the Company recorded a loss of $0, $0, $0.1 million and $0, respectively, of hedge ineffectiveness in earnings due to short-term, partial mismatches in notional amounts. The Company estimates that approximately $3.3 million will be reclassified from accumulated other comprehensive income (loss) as an increase to interest expense over the next 12 months. The table below details the location in the financial statements of the gain or loss recognized on interest rate swaps designated as cash flow hedges for the three and nine months ended September 30, 2016 and September 30, 2015 (in thousands).
Credit-risk-related Contingent Features The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. As of September 30, 2016, the fair values of all of the Company's 23 interest rate swaps were in a liability position of approximately $16.6 million, excluding any adjustment for nonperformance risk related to these agreements. The adjustment for nonperformance risk included in the fair value of the Company’s net liability position was approximately $0.6 million as of September 30, 2016. Accrued interest expense for the Company's interest rate swaps was approximately $0.1 million as of September 30, 2016 and is included in accounts payable, accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets. As of September 30, 2016, the Company has not posted any collateral related to these agreements. If the Company had breached any of its provisions at September 30, 2016, it could have been required to settle its obligations under the agreement of the interest rate swaps in a liability position plus accrued interest for approximately $16.7 million. Fair Value of Interest Rate Swaps The Company’s valuation of the interest rate swaps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs including interest rate curves. The fair values of interest rate swaps are determined by using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2016 and December 31, 2015, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The following sets forth the Company’s financial instruments that are accounted for at fair value on a recurring basis as of September 30, 2016 and December 31, 2015.
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Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Equity Preferred Stock Pursuant to its charter, the Company is authorized to issue 15,000,000 shares of preferred stock, par value $0.01 per share. On March 17, 2016, the Company completed an underwritten public offering of 3,000,000 shares of 6.875% Series C Cumulative Redeemable Preferred Stock ("Series C Preferred Stock"), $0.01 par value per share, at a price to the public of $25.00 per share. The table below sets forth the Company’s outstanding preferred stock issuances as of September 30, 2016.
Dividends on the 9.0% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), 6.625% Series B Cumulative Redeemable Preferred Stock ("Series B Preferred Stock"), and Series C Preferred Stock (collectively, the "Preferred Stock Issuances") are payable quarterly in arrears on or about the last day of March, June, September, and December of each year. Dividends for the Series C Preferred Stock were accrued and cumulative from and including March 17, 2016 to the first payment date on June 30, 2016. The Preferred Stock Issuances rank on parity and rank senior to the Company’s common stock with respect to dividend rights and rights upon the liquidation, dissolution or winding up of the Company. The Preferred Stock Issuances have no stated maturity date and are not subject to mandatory redemption or any sinking fund. Generally, the Company is not permitted to redeem the Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock prior to November 2, 2016, April 16, 2018, and March 17, 2021, respectively, except in limited circumstances relating to the Company’s ability to qualify as a REIT and in certain other circumstances related to a change of control. The tables below set forth the dividends attributable to the Preferred Stock Issuances during the nine months ended September 30, 2016 and the year ended December 31, 2015:
On November 2, 2016, the Company’s board of directors declared the Series B Preferred Stock and Series C Preferred Stock dividend for the quarter ending December 31, 2016 at a quarterly rate of $0.4140625 per share and $0.4296875 per share, respectively. On November 2, 2016, the Company redeemed all of the Series A Preferred Stock, at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends to but excluding the redemption date, without interest, at a rate of $0.19375 per share. Common Stock The following sets forth the Company’s at-the market ("ATM") common stock offering program as of September 30, 2016.
The table below sets forth the activity for the ATM common stock offering programs during the nine months ended September 30, 2016 and the year ended December 31, 2015, respectively (in thousands, except share data).
Subsequent to September 30, 2016, the Company sold 3,124,700 shares under the 2016 $200 million ATM common stock offering program for gross proceeds of $71.1 million. The net proceeds of $70.2 million were used to repay amounts outstanding under the Company's unsecured credit facility. Dividends The table below sets forth the dividends attributable to the common stock that were declared or paid during the nine months ended September 30, 2016 and the year ended December 31, 2015.
On November 2, 2016, the Company’s board of directors declared the common stock dividend for the months ending January 31, 2017, February 28, 2017 and March 31, 2017 at a monthly rate of $0.116667 per share of common stock. Restricted Stock-Based Compensation Pursuant to the 2011 Plan, the Company grants restricted shares of common stock to certain employees of the Company. The restricted shares of common stock are subject to time-based vesting. Restricted shares of common stock granted on January 8, 2016, subject to the recipient’s continued employment, will vest in four equal installments on January 1 of each year. Holders of restricted shares of common stock have voting rights and rights to receive dividends. Restricted shares of common stock may not be sold, assigned, transferred, pledged or otherwise disposed of and are subject to a risk of forfeiture prior to the expiration of the applicable vesting period. The following table summarizes activity related to the Company’s unvested restricted shares of common stock for the nine months ended September 30, 2016 and the year ended December 31, 2015.
The unrecognized compensation expense associated with the Company’s restricted shares of common stock at September 30, 2016 was approximately $3.8 million and is expected to be recognized over a weighted average period of approximately 2.3 years. The following table summarizes the fair value at vesting date for the restricted shares of common stock vested during the three and nine months ended September 30, 2016 and September 30, 2015.
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Noncontrolling Interest |
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Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest | Noncontrolling Interest The Company is structured as an UPREIT, and owns substantially all of its assets and conducts substantially all of its business through its Operating Partnership. The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership, and their subsidiaries. The table below summarizes the activity for noncontrolling interest in the Company for the nine months ended September 30, 2016 and the year ended December 31, 2015.
The Company adjusts the carrying value of noncontrolling interest to reflect its share of the book value of the Operating Partnership when there has been a change in the Company’s ownership of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a rebalancing of noncontrolling interest on the accompanying Consolidated Statements of Equity. LTIP Units LTIP units are granted to certain executive officers and senior employees of the Company as part of their compensation, and to independent directors for their service. LTIP units are valued by reference to the value of the Company’s common stock and are subject to such conditions and restrictions as the compensation committee of the board of directors may determine, including continued employment or service. LTIP units granted on January 6, 2016 to independent directors, subject to the recipient’s continued service, will vest on January 1, 2017. LTIP units granted on January 8, 2016 to certain senior executive officers and senior employees, subject to the recipient’s continued employment, will vest quarterly over four years, with the first vesting date being March 31, 2016. LTIP units granted on February 22, 2016 to certain senior executive officers, subject to the recipient’s continued employment, will vest quarterly over four years, with the first vesting date being March 31, 2016. Vested LTIP units can be converted to Other Common Units on a one-for-one basis once a material equity transaction has occurred that results in the accretion of the member’s capital account to the economic equivalent of an Other Common Unit. All LTIP units, whether vested or not, will receive the same monthly per unit distributions as Other Common Units, which equal per share dividends on common stock. The LTIP units issued under the 2011 Plan were valued using the Monte Carlo lattice binomial option-pricing model at the grant date. The fair value of the LTIP units are based on Level 3 inputs and are non-recurring fair value measurements. The table below sets forth the assumptions used in valuing such LTIP units for the nine months ended September 30, 2016.
On January 25, 2016, the Company and Geoffrey G. Jervis, the Company’s Chief Financial Officer, Executive Vice President and Treasurer, agreed that Mr. Jervis’s employment with the Company would terminate effective February 25, 2016. Pursuant to the terms and conditions of the executive employment agreement and LTIP unit agreements between the Company and Mr. Jervis, and the Company’s 2015 Outperformance Program ("OPP"), Mr. Jervis received a lump sum cash payment, the continuation of certain insurance benefits, immediate vesting of outstanding LTIP units, and eligibility to receive a pro-rated award payment under the OPP. Accordingly, the Company accelerated the expense recognition of Mr. Jervis's unvested LTIP units in the amount of approximately $1.6 million, which is included in general and administrative expenses for the nine months ended September 30, 2016 on the accompanying Consolidated Statements of Operations. Additionally, the unrecognized compensation expense associated with Mr. Jervis's participation in the OPP after February 25, 2016 will not be recognized. The Company also incurred approximately $1.5 million related to the lump sum cash payment and continuation of certain insurance benefits, which is included in general and administrative expenses during the nine months ended September 30, 2016 on the accompanying Consolidated Statements of Operations. The following table summarizes activity related to the Company’s unvested LTIP units for the nine months ended September 30, 2016 and the year ended December 31, 2015.
The unrecognized compensation expense associated with the Company’s LTIP units at September 30, 2016 was approximately $7.7 million and is expected to be recognized over a weighted average period of approximately 2.6 years. The following table summarizes the fair value at vesting date for the LTIP units vested during the three and nine months ended September 30, 2016 and September 30, 2015.
Other Common Units Other Common Units and shares of the Company’s common stock have essentially the same economic characteristics in that Other Common Units directly, and shares of the Company’s common stock indirectly, through the Company’s interest in the Operating Partnership, share equally in the total net income or loss distributions of the Operating Partnership. Subject to certain restrictions, investors who own Other Common Units have the right to cause the Operating Partnership to redeem any or all of their Other Common Units for cash equal to the then-current value of one share of the Company’s common stock, or, at the Company’s election, shares of common stock on a one-for-one basis. The value of a share of common stock is calculated as the average common stock closing price on the New York Stock Exchange for the 10 trading days immediately preceding the redemption notice date. Each Other Common Unit will receive the same monthly distribution as a share of common stock. |
Equity Incentive Plan |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan | Equity Incentive Plan On March 8, 2016, the Company granted performance units, approved by the compensation committee of the board of directors, under the 2011 Plan to provide certain key employees of the Company with incentives designed to align those key employees' interests more closely with those of the stockholders. The ultimate value of the performance units depends on the Company’s total stockholder return ("TSR") over a three-year period commencing January 1, 2016 and ending on December 31, 2018 (the "measuring period"). At the end of the three-year measuring period, the performance units convert into shares of common stock, or, at the Company's election and with the award recipient's consent, LTIP units or other securities, at a rate depending on the Company’s TSR over the measuring period as compared to three different benchmarks and on the absolute amount of the Company’s TSR. A recipient of performance units may receive as few as zero shares or as many as 250% of the number of target units, plus deemed dividends. The target amount of the performance units is nominally allocated as: i) 25% to the Company’s TSR compared to the TSR of an industry peer group; ii) 25% to the Company’s TSR compared to the TSR of a size-based peer group; and iii) 50% to the Company’s TSR compared to the TSR of the companies in the MSCI US REIT index. No dividends are paid to the recipient during the measuring period. At the end of the measuring period, if the Company’s TSR is such that the recipient earns shares of common stock or, at the Company's election and with the award recipient's consent, LTIP units or other securities (“Award Shares”), the recipient will receive additional Award Shares relating to dividends deemed to have been paid and reinvested on the Award Shares. The Company, in the discretion of the compensation committee of the board of directors, may pay the cash value of the deemed dividends instead of issuing additional Award Shares. The number of Award Shares is determined at the end of the measuring period, and one-half of the Award Shares and all dividend shares vest immediately. The other one-half of the Award Shares will be restricted (subject to forfeiture) and vest one year after the end of the measuring period. The fair value of the performance units at the date of grant was $2.6 million, as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a weighted average volatility factor of 23.0%, a weighted average risk-free interest rate of 1.0849%, and a weighted average expected dividend yield of 6.0%. The performance unit equity compensation expense is recognized into earnings on a straight-line basis from the grant date over the respective vesting periods. The unrecognized compensation expense associated with the OPP and the performance plan at September 30, 2016 was approximately $0.6 million and $2.1 million, respectively, and is expected to be recognized over a weighted average period of approximately 1.3 years and 2.7 years, respectively. Non-cash Compensation Expense The following table summarizes the amount recorded in general and administrative expenses in the accompanying Consolidated Statements of Operations for the amortization of restricted shares of common stock, LTIP units, the OPP, performance units, and the Company’s board of directors’ compensation.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The Company uses the two-class method of computing earnings per common share, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Unvested restricted stock awards are considered participating securities as these stock-based awards contain non-forfeitable rights to dividends, unless and until a forfeiture occurs, and these awards must be included in the computation of earnings per share pursuant to the two-class method. During the three and nine months ended September 30, 2016 and September 30, 2015, there were 272,337, 277,720, 275,663 and 284,020, respectively, unvested shares of restricted stock on a weighted average basis that were considered participating securities, which were not dilutive. The following tables set forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2016 and September 30, 2015.
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Commitments and Contingencies |
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Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance subject to deductible requirements. Management believes that the ultimate settlement of these actions will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company is subject to a one-time incentive fee based on aggregate performance thresholds of the acquired buildings sourced by Columbus Nova Real Estate Acquisition Group, LLC. As of September 30, 2016 and December 31, 2015, the fair value of the incentive fee was zero. The fair value was calculated using the following key Level 3 inputs: discount rates of 8.0% to 12.0% and 9.5% as of September 30, 2016 and December 31, 2015, respectively, and exit capitalization rates of 7.0% to 12.0% and 9.8% as of September 30, 2016 and December 31, 2015, respectively. The Company has letters of credit of approximately $3.5 million related to development projects and its corporate office lease as of September 30, 2016. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The following non-recognized subsequent events were noted. Subsequent to September 30, 2016, the Company acquired 9 buildings of approximately 1.9 million square feet for an aggregate contractual purchase price of approximately $101.7 million. Management has not finalized the acquisition accounting and therefore is not able to provide the disclosures otherwise required by GAAP. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Quarterly Financial Information [Text Block] | Interim Financial Information The accompanying interim financial statements have been presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements include all adjustments, consisting of normal recurring items, necessary for their fair statement in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. |
Related-Party Transactions | Related Parties As of September 30, 2016 and December 31, 2015, the Company had approximately $0.1 million and $0.1 million, respectively, of amounts due from related parties, which are included in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership and their subsidiaries. Interests in the Operating Partnership not owned by the Company are referred to as “Noncontrolling Common Units.” These Noncontrolling Common Units are held by other limited partners in the form of common units ("Other Common Units") and long term incentive plan units (“LTIP units”) issued pursuant to the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended (the “2011 Plan”). All significant intercompany balances and transactions have been eliminated in the consolidation of entities. The financial statements of the Company are presented on a consolidated basis for all periods presented. |
Reclassification | |
Adoption of New Accounting Pronouncements | In August of 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides clarified guidance on the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company has elected to early adopt this standard effective July 1, 2016, and the effects of this standard were applied retrospectively to all prior periods presented. The effect of the change in accounting principle was an increase in net cash provided by operating activities of approximately $2.0 million for the six months ended June 30, 2016 and a corresponding increase in net cash used in financing activities for the six months ended June 30, 2016 related to the payment of loan prepayment fees and costs. In March of 2016, the FASB issued ASU 2016-09, Stock Compensation (Topic 718), which addresses certain aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification on the statement of cash flow. This standard is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. The Company has elected to early adopt this standard effective January 1, 2016. As a result, the Company's policy is to recognize forfeitures in the period which they occur, whereas the former guidance required the Company to estimate expected forfeitures. The adoption of this standard did not have a material effect on the consolidated financial statements. In February of 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 is expected to impact the Company’s consolidated financial statements as the Company has certain operating and land lease arrangements for which it is the lessee. Topic 842 supersedes the previous leases standard, Topic 840, Leases. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new standard must be adopted using a modified retrospective transition and will require application of the new guidance at the beginning of the earliest comparative period. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on the Company’s financial position or results of operations. In April of 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30). ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability. In August of 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Subtopic 835-30), which clarified that debt issuance costs related to line-of-credit arrangements may be presented as an asset and amortized over the term of the line-of-credit arrangement regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this standard effective January 1, 2016. As a result, debt issuance costs related to the debt liabilities that are not line-of-credit arrangements are included as a direct deduction from the related debt liability and those related to line-of-credit arrangements continue to be included as an asset within prepaid expenses and other assets on the accompanying Consolidated Balance Sheets. The effects of this standard were applied retrospectively to all prior periods presented. The effect of the change in accounting principle was the reduction of unsecured term loans by approximately $3.4 million, unsecured notes by approximately $2.3 million, and mortgage notes by approximately $1.3 million and a corresponding reduction of prepaid expenses and other assets by approximately $6.9 million as of December 31, 2015. In February of 2015, the FASB issued ASU 2015-02, Amendments to Consolidation Analysis (Topic 810), which amends the current consolidation model. On January 1, 2016, the Company adopted this standard, modifying the analysis it must perform to determine whether it should consolidate certain types of legal entities. The guidance does not amend the existing disclosure requirements for variable interest entities or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, the Operating Partnership will be a variable interest entity of the Company. As the Operating Partnership is already consolidated in the financial statements of the Company, the identification of this entity as a variable interest entity had no impact on the consolidated financial statements of the Company. There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption. In addition, there were no voting interest entities under prior existing guidance determined to be variable interest entities under the revised guidance. In January of 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10). The amendments in ASU 2016-01 address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The standard primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is effective for the annual periods beginning after December 31, 2017 and for annual periods and interim periods within those years. Early adoption is permitted for all financial statements of fiscal years and interim periods that have not yet been issued. The adoption of ASU 2016-01 is not expected to materially impact the Company’s consolidated financial statements. In August of 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. ASU 2014-15 is effective for the annual period ending December 31, 2016 and for annual periods and interim periods thereafter with early adoption permitted. The adoption of ASU 2014-15 is not expected to materially impact the Company’s consolidated financial statements. In May of 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. Revenue from a lease contract with a tenant is not within the scope of this revenue standard. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted for the first interim period within annual reporting periods beginning after December 15, 2016. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations. |
Rental Property | Rental Property The Company capitalizes costs directly and indirectly related to the development, pre-development, redevelopment, or improvement of rental property. Real estate taxes, compensation costs of development personnel, insurance, interest, and other directly related costs during construction periods are capitalized as incurred and depreciated commencing with the date the property is substantially completed. Such costs begin to be capitalized to the development projects from the point the Company is undergoing the necessary activities to get the development ready for its intended use and cease when the development projects are substantially completed and held available for occupancy. Interest is capitalized based on actual capital expenditures from the period when development or redevelopment commences until the asset is ready for its intended use, at the weighted average borrowing rate of the Company's unsecured indebtedness during the period. |
Tenant Accounts Receivable, net | Tenant Accounts Receivable, net Tenant accounts receivable, net on the accompanying Consolidated Balance Sheets includes both tenant accounts receivable, net and accrued rental income, net. The Company provides an allowance for doubtful accounts against the portion of tenant accounts receivable that is estimated to be uncollectible. |
Revenue Recognition | Revenue Recognition Tenant Recoveries By the terms of their leases, certain tenants are obligated to pay directly the costs of their properties’ insurance, real estate taxes, ground lease payments, and certain other expenses, and these costs are not reflected on the Company’s consolidated financial statements. The Company does not recognize recovery revenue related to leases where the tenant has assumed the cost for real estate taxes, insurance, ground lease payments and certain other expenses. To the extent any tenant responsible for these costs under its respective lease defaults on its lease or it is deemed probable that the tenant will fail to pay for such costs, the Company will record a liability for such obligation. |
Taxes | Taxes Federal Income Taxes The Company elected to be taxed as a REIT under the Code commencing with its taxable year ended December 31, 2011 and intends to continue to qualify as a REIT. The Company is generally not subject to corporate level income tax on the earnings distributed currently to its stockholders that it derives from its REIT qualifying activities. As a REIT, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet the various other requirements imposed by the Code relating to such matters as operating results, asset holdings, distribution levels and diversity of stock ownership. The Company will not be required to make distributions with respect to income derived from the activities conducted through subsidiaries that the Company elects to treat as taxable REIT subsidiaries (“TRS”) for federal income tax purposes, nor will it have to comply with income, assets, or ownership restrictions inside of the TRS. Certain activities that the Company undertakes must or should be conducted by a TRS, such as performing non-customary services for its tenants and holding assets that it cannot hold directly. A TRS is subject to federal and state income taxes. On June 24, 2016, the Operating Partnership, through its wholly owned subsidiary, transferred a vacant land parcel located in Burlington, NJ to the Company's TRS. The Company's TRS recognized a net loss of approximately $0.1 million, $0.1 million, $7,000 and $7,000, for the three and nine months ended September 30, 2016 and September 30, 2015, respectively, which has been included on the accompanying Consolidated Statements of Operations. State and Local Income, Excise, and Franchise Tax The Company and certain of its subsidiaries are subject to certain state and local income, excise, and franchise taxes. Taxes in the amount of $0.2 million, $0.7 million, $0.2 million and $0.8 million have been recorded in other expenses on the accompanying Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and September 30, 2015, respectively. Uncertain Tax Positions Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained based solely on its technical merits, with the taxing authority having full knowledge of all relevant information. The measurement of a tax benefit for an uncertain tax position that meets the “more likely than not” threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information. As of September 30, 2016 and December 31, 2015, there were no liabilities for uncertain tax positions. |
Rental Property (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of rental property | The following table summarizes the components of rental property as of September 30, 2016 and December 31, 2015.
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Schedule of real estate properties acquired | The following table summarizes the acquisitions of the Company during the three and nine months ended September 30, 2016.
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Summary of allocation of the consideration paid for the acquired assets and liabilities in connection with the acquisition of buildings at the date of acquisition | The following table summarizes the allocation of the consideration paid at the date of acquisition during the nine months ended September 30, 2016 for the acquired assets and liabilities in connection with the acquisitions identified in the table above.
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Schedule of pro forma information for acquired properties | The table below sets forth the results of operations for three and nine months ended September 30, 2016, for the properties acquired during the nine months ended September 30, 2016, included in the Company’s Consolidated Statements of Operations from the date of acquisition.
The following tables set forth pro forma information for the nine months ended September 30, 2016 and September 30, 2015. The below pro forma information does not purport to represent what the actual results of operations of the Company would have been had the acquisitions outlined above occurred on the first day of the applicable reporting period, nor do they purport to predict the results of operations of future periods. The pro forma information has not been adjusted for property sales.
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Schedule of Finite-Lived Intangible Assets and Below Market Leases | The following table summarizes the deferred leasing intangibles on the accompanying Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015.
The following table sets forth the amortization expense and the net decrease to rental revenue for the amortization of deferred leasing intangibles during the three and nine months ended September 30, 2016 and September 30, 2015.
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table sets forth the amortization of deferred leasing intangibles over the next five years as of September 30, 2016.
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Below Market Lease, Future Amortization Income | The following table sets forth the amortization of deferred leasing intangibles over the next five years as of September 30, 2016.
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the mortgage notes payable, unsecured term loans and credit facility | The following table sets forth a summary of the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes and mortgage notes as of September 30, 2016 and December 31, 2015.
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Schedule of aggregate carrying value of the debt and the corresponding estimate of fair value | The following table presents the aggregate principal outstanding of the Company’s debt and the corresponding estimate of fair value as of September 30, 2016 and December 31, 2015 (in thousands).
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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 interest rate swaps | The following table details the Company’s outstanding interest rate swaps as of September 30, 2016.
The fair value of the interest rate swaps outstanding as of September 30, 2016 and December 31, 2015 was as follows.
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Schedule of the location in the financial statements of the gain or loss recognized on interest rate swaps | The table below details the location in the financial statements of the gain or loss recognized on interest rate swaps designated as cash flow hedges for the three and nine months ended September 30, 2016 and September 30, 2015 (in thousands).
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Schedule of financial instruments accounted for at fair value on a recurring basis | The following sets forth the Company’s financial instruments that are accounted for at fair value on a recurring basis as of September 30, 2016 and December 31, 2015.
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Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock by Class | The table below sets forth the Company’s outstanding preferred stock issuances as of September 30, 2016.
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Schedule of dividends | The tables below set forth the dividends attributable to the Preferred Stock Issuances during the nine months ended September 30, 2016 and the year ended December 31, 2015:
Dividends The table below sets forth the dividends attributable to the common stock that were declared or paid during the nine months ended September 30, 2016 and the year ended December 31, 2015.
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Schedule of stock sale activity | The following sets forth the Company’s at-the market ("ATM") common stock offering program as of September 30, 2016.
The table below sets forth the activity for the ATM common stock offering programs during the nine months ended September 30, 2016 and the year ended December 31, 2015, respectively (in thousands, except share data).
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Schedule of activity related to unvested restricted stock awards | The following table summarizes activity related to the Company’s unvested restricted shares of common stock for the nine months ended September 30, 2016 and the year ended December 31, 2015.
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Schedule of fair value at vesting date for awards vesting during the period | The following table summarizes the fair value at vesting date for the restricted shares of common stock vested during the three and nine months ended September 30, 2016 and September 30, 2015.
The table below sets forth the assumptions used in valuing such LTIP units for the nine months ended September 30, 2016.
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Noncontrolling Interest (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest activity | The table below summarizes the activity for noncontrolling interest in the Company for the nine months ended September 30, 2016 and the year ended December 31, 2015.
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Schedule of fair value at vesting date for awards vesting during the period | The following table summarizes the fair value at vesting date for the restricted shares of common stock vested during the three and nine months ended September 30, 2016 and September 30, 2015.
The table below sets forth the assumptions used in valuing such LTIP units for the nine months ended September 30, 2016.
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Schedule of activity related to share-based compensation | The following table summarizes activity related to the Company’s unvested LTIP units for the nine months ended September 30, 2016 and the year ended December 31, 2015.
The following table summarizes the fair value at vesting date for the LTIP units vested during the three and nine months ended September 30, 2016 and September 30, 2015.
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Equity Incentive Plan (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Equity Compensation Expense | The following table summarizes the amount recorded in general and administrative expenses in the accompanying Consolidated Statements of Operations for the amortization of restricted shares of common stock, LTIP units, the OPP, performance units, and the Company’s board of directors’ compensation.
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted earnings per common share | The following tables set forth the computation of basic and diluted earnings per common share for the three and nine months ended September 30, 2016 and September 30, 2015.
|
Organization and Description of Business (Details) ft² in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2016
ft²
tenant
state
building
|
Dec. 31, 2015 |
Nov. 02, 2016
ft²
|
|
Real Estate Properties [Line Items] | |||
Ownership interest in Operating Partnership (as a percent) | 95.20% | 95.10% | |
Number of properties | 300 | ||
Number of states in which the entity owned buildings | state | 37 | ||
Area (in square feet) | ft² | 58.6 | 1.9 | |
Percentage of buildings leased to tenants | 95.30% | ||
Number of tenants | tenant | 262 | ||
Warehouse - Distribution buildings | |||
Real Estate Properties [Line Items] | |||
Number of properties | 236 | ||
Light Manufacturing buildings | |||
Real Estate Properties [Line Items] | |||
Number of properties | 47 | ||
Flex/Office Buildings | |||
Real Estate Properties [Line Items] | |||
Number of properties | 16 | ||
Other Property [Member] | |||
Real Estate Properties [Line Items] | |||
Number of properties | 1 |
Summary of Significant Accounting Policies - Tenant Accounts Receivable (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Tenant Accounts Receivable, net | ||
Lease security deposits available in existing letters of credit | $ 6.9 | $ 6.1 |
Cash and Cash Equivalents | ||
Tenant Accounts Receivable, net | ||
Security deposit | 4.3 | 4.1 |
Restricted Cash | ||
Tenant Accounts Receivable, net | ||
Security deposit | 0.4 | 0.4 |
Security Deposits | ||
Tenant Accounts Receivable, net | ||
Lease security deposits available in cash | 4.7 | 4.5 |
Prepaid Expenses and Other Assets | ||
Tenant Accounts Receivable, net | ||
Due from related parties | 0.1 | 0.1 |
Accrued Income Receivable [Member] | ||
Tenant Accounts Receivable, net | ||
Allowance for doubtful accounts | 0.1 | 0.1 |
Accrued Rental Income | ||
Tenant Accounts Receivable, net | ||
Allowance for doubtful accounts | 0.0 | 0.0 |
Accrued rental revenue | $ 17.7 | $ 16.1 |
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Oct. 20, 2015 |
|
Revenue Recognition | |||||
Estimated amount of real estate taxes, which are the responsibility of tenants | $ 2,700 | $ 2,700 | $ 7,900 | $ 7,800 | |
Dayton, OH, Q4 2007 | |||||
Revenue Recognition | |||||
Lease termination fee receivable | $ 200 | ||||
Dayton, OH, Q4 2007 | Rental income | |||||
Revenue Recognition | |||||
Gain (Loss) on Contract Termination | $ 100 | $ 200 |
Summary of Significant Accounting Policies - Taxes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | |||||
Net income (loss) | $ (401,000) | $ (4,680,000) | $ 928,000 | $ (11,335,000) | |
State and local income, excise and franchise taxes | 200,000 | 200,000 | 700,000 | 800,000 | |
Liabilities for uncertain tax positions | 0 | 0 | $ 0 | ||
Real Estate Investment Trust | |||||
Business Acquisition [Line Items] | |||||
Net income (loss) | $ (100,000) | $ (7,000) | $ (100,000) | $ (7,000) |
Rental Property - Acquisitions - Pro Forma (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Business Acquisition [Line Items] | ||||
Property acquisition costs | $ 1,978 | $ 1,006 | $ 3,113 | $ 2,511 |
Acquisitions 2016 [Member] | ||||
Business Acquisition [Line Items] | ||||
Revenue | 3,543 | 4,950 | ||
Property acquisition costs | 1,715 | 2,740 | ||
Net income (loss) | $ 1,560 | 2,521 | ||
Pro forma information | ||||
Total revenue | 196,336 | |||
Net loss | (4,896) | |||
Net loss attributable to common stockholders | 6,003 | |||
Acquisitions 2015 | ||||
Pro forma information | ||||
Total revenue | 188,176 | |||
Net loss | 17,018 | |||
Net loss attributable to common stockholders | 24,216 | |||
Series of Individually Immaterial Business Acquisitions | ||||
Business Acquisition [Line Items] | ||||
Property acquisition costs | $ 2,740 | $ 2,200 |
Rental Property Rental Property - Involuntary Conversion (Details) - Storm Damage [Member] $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Loss Contingencies [Line Items] | ||
Loss Contingency, Loss in Period | $ 2.2 | $ 2.2 |
Insurance Settlements Receivable, Current | $ 1.7 | $ 1.7 |
Use of Derivative Financial Instruments - FV of Interest Rate Swaps (Details) - Interest Rate Swaps - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair value of the interest rate swaps outstanding | ||
Notional amount assets | $ 0 | $ 275,000 |
Fair value - assets | 0 | 1,867 |
Notional amount liabilities | 675,000 | 400,000 |
Fair Value - liabilities | $ (15,953) | $ (3,766) |
Use of Derivative Financial Instruments - FV on Recurring Basis (Details) - Interest Rate Swaps - Fair value on recurring basis - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets (liabilities): | ||
Interest rate swaps-Asset | $ 0 | $ 1,867 |
Interest rate swaps-Liability | (15,953) | (3,766) |
Level 1 | ||
Assets (liabilities): | ||
Interest rate swaps-Asset | 0 | 0 |
Interest rate swaps-Liability | 0 | 0 |
Level 2 | ||
Assets (liabilities): | ||
Interest rate swaps-Asset | 0 | 1,867 |
Interest rate swaps-Liability | (15,953) | (3,766) |
Level 3 | ||
Assets (liabilities): | ||
Interest rate swaps-Asset | 0 | 0 |
Interest rate swaps-Liability | $ 0 | $ 0 |
Equity - Restricted Stock (Details) - 2011 Equity Incentive Plan - Restricted stock - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Shares | |||||
Unvested at beginning of period (in shares) | 271,115 | 263,916 | 263,916 | ||
Granted (in shares) | 101,289 | 94,290 | |||
Vested (in shares) | 0 | 0 | (98,746) | (72,185) | (72,185) |
Forfeited (in shares) | (1,321) | (14,906) | |||
Unvested at end of period (in shares) | 272,337 | 272,337 | 271,115 | ||
Grant date fair value (in dollars per share) | $ 17.98 | $ 26.17 | |||
Unrecognized compensation costs | $ 3,800 | $ 3,800 | |||
Number of shares vested | 0 | 0 | 98,746 | 72,185 | 72,185 |
Fair value of shares vested | $ 0 | $ 0 | $ 1,813 | $ 1,751 | |
Unrecognized compensation costs, period for recognition | 2 years 3 months 13 days | ||||
Granted on January 8, 2016 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period (in years) | 4 years |
Earnings Per Share (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Restricted stock | ||||
Antidilutive participating securities | ||||
Participating securities | 272,337 | 275,663 | 277,720 | 284,020 |
Earnings Per Share - Reconciliation of Numerator and Denominator (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 |
|
Numerator | ||||
Net income (loss) from continuing operations | $ (401) | $ (4,680) | $ 928 | $ (11,335) |
Less: preferred stock dividends | 4,001 | 2,712 | 10,914 | 8,136 |
Less: amount allocated to participating securities | 95 | 95 | 289 | 291 |
Less: loss attributable to noncontrolling interest after preferred stock dividends | (216) | (359) | (505) | (951) |
Net loss attributable to common stockholders | $ (4,281) | $ (7,128) | $ (9,770) | $ (18,811) |
Denominator | ||||
Weighted average common shares outstanding - basic and diluted (in shares) | 71,130,848 | 67,799,700 | 68,984,670 | 65,803,304 |
Loss per share - basic and diluted (in dollars per share) | $ (0.06) | $ (0.11) | $ (0.14) | $ (0.29) |
Subsequent Events Subsequent Events - Acquisitions (Details) ft² in Millions, $ in Millions |
1 Months Ended | |
---|---|---|
Nov. 02, 2016
USD ($)
ft²
building
|
Sep. 30, 2016
ft²
|
|
Subsequent Event [Line Items] | ||
Area (in square feet) | ft² | 1.9 | 58.6 |
Non-recognized Subsequent Event | ||
Subsequent Event [Line Items] | ||
Number of Buildings Acquired | building | 9 | |
Business Combination, Consideration Transferred | $ | $ 101.7 |
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