Real Estate Investments (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table presents the allocation of the fair values of the assets acquired and liabilities assumed during the periods presented (in thousands):



	Nine Months Ended September 30,
	2015			2014
Real estate investments, at cost:
Land	$	2,047		$	812,712
Buildings, fixtures and improvements	5,258			2,486,868
Land and construction in progress	2,140			11,083
Total tangible assets	9,445			3,310,663
Acquired intangible assets:
In-place leases	717			522,568
Above-market leases	153			110,230
Assumed intangible liabilities:
Below-market leases	(108		)	(101,108		)
Fair value adjustment of assumed notes payable	—			(23,531		)
Total purchase price of assets acquired, net	10,207			3,818,822
Mortgage notes payable assumed	—			(301,532		)
Cash paid for acquired real estate investments	$	10,207		$	3,517,290

Schedule of Future Minimum Operating Lease Base Rent Payments

These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (in thousands):



	Future Minimum Operating Lease Base Rent Payments		Future Minimum Direct Financing Lease Payments ⁽¹⁾
October 1, 2015 - December 31, 2015	$	289,399	$	1,166
2016	1,225,267		4,674
2017	1,194,341		4,273
2018	1,158,149		3,183
2019	1,117,327		2,397
Thereafter	9,744,736		7,916
Total	$	14,729,219	$	23,609

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(1)	37 properties are subject to direct financing leases and, therefore, revenue is recognized as direct financing lease income on the discounted cash flows of the lease payments. Amounts reflected are the minimum base rental cash payments due to the Company under the lease agreements on these respective properties.

The following table reflects the minimum base rent payments due from the Company over the next five years and thereafter for certain ground lease obligations, which are substantially reimbursable by our tenants, and office lease obligations (in thousands):



	Future Minimum Base Rent Payments
	Ground Leases		Offices Leases
October 1, 2015 - December 31, 2015	$	4,845	$	1,292
2016	18,518		5,010
2017	17,947		4,585
2018	15,785		4,703
2019	15,383		4,769
Thereafter	251,217		18,558
Total	$	323,695	$	38,917

Schedule of Future Minimum Direct Financing Lease Payments



	Future Minimum Operating Lease Base Rent Payments		Future Minimum Direct Financing Lease Payments ⁽¹⁾
October 1, 2015 - December 31, 2015	$	289,399	$	1,166
2016	1,225,267		4,674
2017	1,194,341		4,273
2018	1,158,149		3,183
2019	1,117,327		2,397
Thereafter	9,744,736		7,916
Total	$	14,729,219	$	23,609

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(1)	37 properties are subject to direct financing leases and, therefore, revenue is recognized as direct financing lease income on the discounted cash flows of the lease payments. Amounts reflected are the minimum base rental cash payments due to the Company under the lease agreements on these respective properties.

Schedule of Capital Leased Assets

The components of the Company’s net investment in direct financing leases as of September 30, 2015 and December 31, 2014 are as follows (in thousands):



	September 30, 2015			December 31, 2014
Future minimum lease payments receivable	$	23,609		$	27,199
Unguaranteed residual value of property	33,598			39,852
Unearned income	(7,963		)	(10,975		)
Net investment in direct financing leases	$	49,244		$	56,076

Schedule of Future Construction Commitments

Below is a summary of the construction commitments as of September 30, 2015 (dollar amounts in thousands):



Development projects in progress	14

Investment to date	17,666
Estimated cost to complete ⁽¹⁾	7,447
Total Investment ⁽²⁾	$	25,113

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(1) The Company is contractually committed to fund a developer $4.1 million to complete the remaining 10 build-to-suit developments.

(2) Excludes tenant improvement costs incurred in accordance with existing leases. As of September 30, 2015, $16.7 million of tenant improvement costs were included in land and construction in progress in the consolidated financial statements.

Summary of Unconsolidated Joint Ventures

The following is a summary of the Company’s percentage ownership and carrying amount related to each of the Unconsolidated Joint Ventures as of September 30, 2015 (dollar amounts in thousands):



Name of Joint Venture	Partner	Ownership % ⁽¹⁾	Carrying Amount of Investment ⁽²⁾
Cole/Mosaic JV South Elgin IL, LLC	Affiliate of Mosaic Properties and Development, LLC	50%	$	6,763
Cole/LBA JV OF Pleasanton CA, LLC	Affiliate of LBA Realty	90%	33,612
Cole/Faison JV Bethlehem GA, LLC	Faison-Winder Investors, LLC	90%	13,292
			$	53,667

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(1) The Company’s ownership interest in this table reflects its legal ownership interest. Legal ownership may, at times, not equal the Company’s economic interest in the listed properties because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.

(2) The total carrying amount of the investments is greater than the underlying equity in net assets by $10.2 million. This difference relates to a purchase price allocation of goodwill and a step up in fair value of the investment assets acquired in connection with the Cole Merger. The step up in fair value was allocated to the individual investment assets and is being amortized in accordance with the Company’s depreciation policy.