Real Estate Investments and Related Intangibles (Tables)

12 Months Ended

Dec. 31, 2017

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):



	Year Ended December 31,
	2017			2016			2015
Real estate investments, at cost:
Land	$	110,634		$	23,187		$	5,051
Buildings, fixtures and improvements	523,445			67,865			28,643
Total tangible assets	634,079			91,052			33,694
Acquired intangible assets:
In-place leases and other intangibles ⁽¹⁾	105,940			9,613			2,580
Above-market leases⁽²⁾	10,445			—			153
Assumed intangible liabilities:
Below-market leases ⁽³⁾	(1,680		)	(471		)	(108		)
Total purchase price of assets acquired	$	748,784		$	100,194		$	36,319

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(1)	The weighted average amortization period for acquired in-place leases and other intangibles is 15.8 years, 13.8 years and 11.0 years for 2017 Acquisitions, 2016 Acquisitions and 2015 Acquisitions, respectively.


(2)	The weighted average amortization period for acquired above-market leases is 18.0 years and 14.1 years for 2017 Acquisitions and 2015 Acquisitions, respectively. There were no acquired above-market leases during the year ended December 31, 2016.


(3)	The weighted average amortization period for acquired intangible lease liabilities is 13.8 years, 10.0 years and 15.0 years for 2017 Acquisitions, 2016 Acquisitions and 2015 Acquisitions, respectively.

Schedule of Future Minimum Operating Lease Base Rent Payments

The following table presents future minimum base rent payments due to the Company over the next five years and thereafter. 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⁾
2018	$	1,105,205	$	3,016
2019	1,082,111		2,397
2020	1,049,997		2,023
2021	1,009,474		1,899
2022	929,909		1,809
Thereafter	5,950,591		2,184
Total	$	11,127,287	$	13,328

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(1)	29 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		Office Leases
2018	$	14,523	$	4,394
2019	14,467		4,359
2020	14,350		4,389
2021	13,721		4,368
2022	13,935		4,419
Thereafter	211,514		3,995
Total	$	282,510	$	25,924

Schedule of Future Minimum Direct Financing Lease Payments



	Future Minimum Operating Lease Base Rent Payments		Future Minimum Direct Financing Lease Payments ⁽¹⁾
2018	$	1,105,205	$	3,016
2019	1,082,111		2,397
2020	1,049,997		2,023
2021	1,009,474		1,899
2022	929,909		1,809
Thereafter	5,950,591		2,184
Total	$	11,127,287	$	13,328

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(1)	29 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 Intangible Assets

Intangible lease assets and liabilities of the Company consisted of the following as of December 31, 2017 and December 31, 2016 (amounts in thousands, except weighted-average useful life):



	Weighted-Average Useful Life	December 31, 2017		December 31, 2016
Intangible lease assets:
In-place leases and other intangibles, net of accumulated amortization of $599,680 and $494,131, respectively	15.2	$	1,091,433	$	1,192,756
Leasing commissions, net of accumulated amortization of $2,902 and $1,836, respectively	10.6	13,876		10,231
Above-market lease assets and deferred lease incentives, net of accumulated amortization of $88,335 and $69,670, respectively	16.3	241,449		275,897
Total intangible lease assets, net		$	1,346,758	$	1,478,884

Intangible lease liabilities:
Below-market leases, net of accumulated amortization of $73,916 and $56,891, respectively	18.7	$	198,551	$	224,023

Schedule of Projected Amortization Expense and Adjustments

The following table provides the projected amortization expense and adjustments to rental income related to the intangible lease assets and liabilities for the next five years as of December 31, 2017 (amounts in thousands):



	2018		2019		2020		2021		2022
In-place leases and other intangibles:
Total projected to be included in amortization expense	$	135,212	$	125,701	$	118,390	$	110,425	$	95,990
Leasing commissions:
Total projected to be included in amortization expense	1,186		1,172		1,150		1,112		1,056
Above-market lease assets and deferred lease incentives:
Total projected to be deducted from rental income	23,773		22,039		21,625		21,197		20,383
Below-market lease liabilities:
Total projected to be included in rental income	19,097		18,392		17,244		16,045		15,201

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 December 31, 2017 and December 31, 2016 (dollar amounts in thousands):



			Carrying Amount of Investment ⁽²⁾
Name of Joint Venture	Partner	Ownership % ⁽¹⁾	December 31, 2017		December 31, 2016
Cole/Mosaic JV South Elgin IL, LLC	Affiliate of Mosaic Properties and Development, LLC	50%	$	5,382	$	5,891
Cole/Faison JV Bethlehem GA, LLC	Faison-Winder Investors, LLC	90%	34,138		35,438
			$	39,520	$	41,329

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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 was greater than the underlying equity in net assets by $8.6 million and $6.4 million as of December 31, 2017. and December 31, 2016, respectively. 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 mergers. 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.