UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
COMMISSION FILE NUMBER: 000-55146
Inland Real Estate Income Trust, Inc.
(Exact name of registrant as specified in its charter)
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Maryland |
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45-3079597 |
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(State or other jurisdiction of |
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Identification No.) |
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2901 Butterfield Road, Oak Brook, Illinois |
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60523 |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There is no established public market for the registrant’s shares of common stock. On March 29, 2017, the board of directors of the registrant determined an estimated per share net asset value of the registrant’s common stock of $22.63. Based on this estimated per share net asset value, the aggregate value of the registrant’s common stock held by non-affiliates as of June 30, 2017 (the last business day of the registrant’s most recently completed second fiscal quarter) was $801,423,971. As of March 8, 2018, there were 35,600,624 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant incorporates by reference portions of its Definitive Proxy Statement for the 2018 Annual Meeting of Stockholders, which is expected to be filed no later than 120 days after the end of the fiscal year, into Part III of this Form 10-K to the extent stated herein.
INLAND REAL ESTATE INCOME TRUST, INC.
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Part I |
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Item 1. |
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1 |
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Item 1A. |
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4 |
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Item 1B. |
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25 |
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Item 2. |
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25 |
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Item 3. |
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28 |
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Item 4. |
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28 |
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Part II |
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Item 5. |
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29 |
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Item 6. |
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34 |
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Item 7. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 7A. |
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Item 8. |
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49 |
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Item 9. |
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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78 |
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Item 9A. |
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78 |
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Item 9B. |
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78 |
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Part III |
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Item 10. |
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79 |
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Item 11. |
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79 |
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Item 12. |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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79 |
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Item 13. |
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Certain Relationships and Related Transactions, and Director Independence |
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79 |
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Item 14. |
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79 |
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Part IV |
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Item 15. |
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80 |
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Item 16. |
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80 |
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90 |
Inland Real Estate Income Trust, Inc. (which we refer to herein as the “Company”, “we”, “our” or “us”) was incorporated on August 24, 2011 to acquire and manage a portfolio of commercial real estate investments located in the United States. We have primarily focused on acquiring retail properties. We have invested in joint ventures and may continue to invest in additional joint ventures or acquire other real estate assets such as office and medical office buildings, multi-family properties and industrial/distribution and warehouse facilities if our management believes the expected returns from those investments exceed that of retail properties. We also may invest in real estate-related equity securities of both publicly traded and private real estate companies, as well as commercial mortgage-backed securities (“CMBS”). Our sponsor, Inland Real Estate Investment Corporation, referred to herein as our “Sponsor” or “IREIC,” is an indirect subsidiary of The Inland Group, Inc. Various affiliates of our Sponsor provide services to us. We are externally managed and advised by IREIT Business Manager & Advisor, Inc., referred to herein as our “Business Manager,” an indirect wholly owned subsidiary of our Sponsor. Our Business Manager is responsible for overseeing and managing our day-to-day operations. Our properties are managed by Inland Commercial Real Estate Services LLC, referred to herein as our “Real Estate Manager,” an indirect wholly owned subsidiary of our Sponsor.
On January 16, 2018, we effected a 1-for-2.5 reverse stock split of our issued and outstanding common stock whereby every 2.5 shares of our issued and outstanding common stock were converted into one share of our common stock (the “Reverse Stock Split”). In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), all share information presented has been retroactively adjusted to reflect the Reverse Stock Split.
We commenced an initial public “best efforts” offering (the “Offering”) on October 18, 2012, which concluded on October 16, 2015. We sold 33,534,022 shares of common stock generating gross proceeds of $834.4 million from the Offering. On March 29, 2017, our board of directors determined an estimated per share net asset value (the “Estimated Per Share NAV”) of our common stock of $22.63 ($9.05 prior to the Reverse Stock Split). The previously estimated per share net asset value of $22.55 ($9.02 prior to the Reverse Stock Split) was established on April 7, 2016. We intend to publish an updated estimated value of our shares (the “Updated Estimated Per Share NAV”) no later than March 30, 2018.
At December 31, 2017, we owned 59 retail properties, totaling approximately 6.9 million square feet. At December 31, 2017, our portfolio had weighted average physical and economic occupancy of 93.9% and 94.8%, respectively. Economic occupancy excludes square footage that we own but which is not occupied by a tenant and which is subject to an earnout component on the original purchase price. As of December 31, 2017, 2016 and 2015, annualized base rent (“ABR”) per square foot averaged $17.16, $17.25 and $17.05, respectively, for all properties owned. ABR is calculated by annualizing the current, in-place monthly base rent for leases, including any tenant concessions, such as rent abatement or allowances, which may have been granted and excluding ground leases. ABR including ground leases averaged $14.81, $15.13 and $14.90 as of December 31, 2017, 2016 and 2015, respectively. We also have invested in a joint venture to develop three transitional care/rapid recovery centers.
We provide the following programs to facilitate additional investment in our shares and to provide limited liquidity for stockholders.
Distribution Reinvestment Plan
On October 19, 2015, we registered 25,000,000 shares of common stock to be issued under our distribution reinvestment plan (“DRP”) pursuant to a registration statement on Form S-3D. Through the DRP, we provide existing stockholders with the option to purchase additional shares from us by automatically reinvesting distributions, subject to certain share ownership restrictions. We do not pay any selling commissions or a marketing contribution and due diligence expense allowance in connection with the DRP. The price per share for shares of common stock purchased under the DRP is equal to the Estimated Per Share NAV unless and until the shares become listed for trading. On March 30, 2017, we reported a new Estimated Per Share NAV of $22.63 ($9.05 prior to the Reverse Stock Split). Beginning with the first quarter 2018 distribution payable in April, shares sold through the DRP will be at a price equal to the Updated Estimated Per Share NAV.
Distributions reinvested through the DRP were approximately $27.1 million, $27.8 million and $20.8 million for the years ended December 31, 2017, 2016 and 2015, respectively.
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Under our amended and restated share repurchase program (“SRP”), we are authorized, in our discretion, to purchase shares from stockholders who purchased their shares from us or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested. Subject to funds being available, we limit the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year, as adjusted by the Reverse Stock Split. Funding for the SRP is limited to the proceeds we receive from the DRP during the same period. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, the one year holding period does not apply. The SRP will immediately terminate if our shares become listed for trading on a national securities exchange. In addition, our board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP.
Repurchases through the SRP were approximately $21.1 million, $9.7 million and $3.8 million for the years ended December 31, 2017, 2016 and 2015, respectively.
Segment Data
We currently view our real estate portfolio as one reportable segment in accordance with U.S. GAAP. Accordingly, we did not report any other segment disclosure for the years ended December 31, 2017, 2016 and 2015. For information related to our business segment, reference is made to Note 12 – “Segment Reporting” which is included in our December 31, 2017 Notes to Consolidated Financial Statements in Item 8.
Tax Status
We qualified and elected to be taxed as a real estate investment trust for U.S. federal income tax purposes (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”), commencing with the tax year ended December 31, 2013. As a result, we generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income (subject to certain adjustments and excluding any net capital gain) to its stockholders. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, we will be subject to federal and state income tax on our taxable income at regular corporate tax rates. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income, property or net worth and federal income and excise taxes on our undistributed income.
Competition
The commercial real estate market is highly competitive. We compete in all of our markets with other owners and operators of commercial properties. We compete based on a number of factors that include location, rental rates, security, suitability of the property’s design to tenants’ needs and the manner in which the property is operated and marketed. The number of competing properties in a particular market could have a material effect on a property’s occupancy levels, rental rates and operating expenses.
We are subject to significant competition in seeking real estate investments and tenants. We compete with many third parties engaged in real estate investment activities including other REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, lenders, hedge funds, governmental bodies and other entities. Some of these competitors, including larger REITs, have substantially greater financial resources than we do and generally enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.
Employees
We do not have any employees. In addition, all of our executive officers are officers of IREIC or one or more of its affiliates and are compensated by those entities, in part, for their services rendered to us. We neither separately compensate our executive officers for their service as officers, nor do we reimburse either our Business Manager or Real Estate Manager for any compensation paid to individuals who also serve as our executive officers, or the executive officers of our Business Manager or its affiliates or our Real Estate Manager; provided that, for these purposes, the corporate secretaries of our Company and our Business Manager are not considered “executive officers.”
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Certain persons performing services for our Business Manager and Real Estate Manager are employees of IREIC or its affiliates, and may also perform services for its affiliates and other IREIC-sponsored entities. These individuals face competing demands for their time and services and may have conflicts in allocating their time between our business and assets and the business and assets of these other entities. IREIC also may face a conflict of interest in allocating personnel and resources among these entities. In addition, conflicts exist to the extent that we acquire properties in the same geographic areas where properties owned by other IREIC-sponsored programs are located. In these cases, a conflict may arise in the acquisition or leasing of properties if we and another IREIC-sponsored program are competing for the same properties or tenants in negotiating leases, or a conflict may arise in connection with the resale of properties if we and another IREIC-sponsored program are selling similar properties at the same time.
Our charter contains provisions setting forth our ability to engage in certain related party transactions. Our board of directors reviews all of these transactions and, as a general rule, any related party transactions must be approved by a majority of the directors, including a majority of the independent directors, not otherwise interested in the transaction. Further, we may not engage in certain transactions with entities sponsored by, or affiliated with, IREIC unless a majority of our board of directors, including a majority of our independent directors, finds the transaction to be fair and reasonable and on terms no less favorable to us than those from an unaffiliated party under the same circumstances. Our board has adopted a conflicts of interest policy prohibiting us from engaging in the following types of transactions with IREIC-affiliated entities:
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purchasing real estate assets from, or selling real estate assets to, any IREIC-affiliated entities (excluding circumstances where an entity affiliated with IREIC, such as Inland Real Estate Acquisitions, LLC (“IREA”), from time to time may enter into a purchase agreement to acquire a property and then assign the purchase agreement to us); |
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making loans to, or borrowing money from, any IREIC-affiliated entities (this excludes expense advancements under existing agreements and the deposit of monies in any banking institution affiliated with IREIC); and |
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investing in joint ventures with any IREIC-affiliated entities. |
This policy does not impact agreements or relationships between us and IREIC and its affiliates, including, for example, agreements with our Business Manager or Real Estate Manager that relate to the day-to-day management of our business.
Environmental Matters
As an owner of real estate, we are subject to various environmental laws, rules and regulations adopted by various governmental bodies or agencies. Compliance with these laws, rules and regulations has not had a material adverse effect on our business, assets, or results of operations, financial condition and ability to pay distributions. We do not believe that our existing portfolio as of December 31, 2017 will require us to incur material expenditures to comply with these laws and regulations.
Access to Company Information
We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (“SEC”). The public may read and copy any of the reports that are filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically.
We make available, free of charge, on our website, inland-investments.com/inland-income-trust, or by responding to requests addressed to our investor services group, the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports. These reports are available as soon as reasonably practicable after such material is electronically filed or furnished to the SEC.
Certifications
We have filed with the SEC the certifications required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which are attached as Exhibits 31.1, 31.2 and 31.3 to this Annual Report on Form 10-K.
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The factors described below represent our principal risks. Other factors may exist that we do not consider significant based on information that is currently available or that we are not currently able to anticipate. The occurrence of any of the risks discussed below could have a material adverse effect on our business, financial condition, results of operations and ability to pay distributions to our stockholders.
Risks Related to Our Business
We have incurred net losses on a U.S. GAAP basis for the years ended December 31, 2017, 2016 and 2015.
We have incurred net losses on a U.S. GAAP basis for the years ended December 31, 2017, 2016 and 2015 of approximately $19.1 million, $8.0 million and $13.4 million, respectively. Our losses can be attributed, in part, to non-cash expenses, such as depreciation and amortization, acquisition related expenses and, in 2017, impairment charges. We may incur net losses in the future, which could have a material adverse impact on our financial condition, operations, cash flow, and our ability to service our indebtedness and pay distributions to our stockholders. We are subject to all of the business risks and uncertainties associated with any business. We cannot assure our stockholders that, in the future, we will be profitable or that we will realize growth in the value of our assets.
The amount and timing of distributions, if any, may vary. We have paid and may continue to pay distributions from sources other than cash flow from operations, including the proceeds of our DRP.
There are many factors that can affect the availability and timing of distributions paid to our stockholders such as our ability to buy, and earn positive yields on, assets, our operating expense levels, as well as many other variables. We may not generate sufficient cash flow from operations to fund any distributions to our stockholders. The actual amount and timing of distributions, if any, is determined by our board of directors in its discretion, based on its analysis of our actual and expected cash flow, capital expenditures and investments, as well as general financial conditions. Actual cash available for distribution may vary substantially from estimates made by our board. In addition, to the extent we invest in development or redevelopment projects, or in real estate assets that have significant capital requirements, our ability to make distributions may be negatively impacted.
Historically, we have not consistently generated sufficient cash flow from operations to fund distribution payments. Our organizational documents permit us to pay distributions from sources other than cash flow from operations. Specifically, some or all of our distributions may be paid from retained cash flow (if any), from borrowings and from cash flow from investing activities, including the net proceeds from the sale of our assets, or from the proceeds of our DRP. Accordingly, if we cannot continue to generate sufficient cash flow from operations to fully fund distributions, some or all of our distributions may be paid from other sources, including from the proceeds of our DRP. We have not established any limit on the extent to which we may use alternate sources, including borrowings or proceeds of the DRP, to pay distributions.
Funding distributions from the proceeds of our DRP, borrowings or asset sales will result in us having fewer funds available to acquire properties or other real estate-related investments. As a result, the return our stockholders realize on their investment may be reduced. Doing so may also negatively impact our ability to generate cash flows. Likewise, funding distributions from the sale of additional securities will dilute our stockholders interest in us on a percentage basis and may impact the value of their investment especially if we sell these securities at prices less than the price our stockholders paid for their shares. A decrease in the level of stockholder participation in the DRP could have an adverse impact on our ability to fund distributions and other operating and capital needs. There is no assurance we will continue to generate sufficient cash flow from operations to cover distributions. If these sources are not available or are not adequate, our board may have to consider reducing or eliminating distributions.
Our Business Manager is under no obligation, and may not agree, to continue to forgo or defer its business management fee and acquisition fee.
Through December 31, 2017, our Business Manager has forgone its business management fees and acquisition fees of $0.7 million and $4.8 million, respectively.
We have funded and may continue to fund distributions from, among other things, advances or contributions from our Business Manager or IREIC or from the cash retained by us in the case that our Business Manager defers, accrues or waives all, or a portion, of its business management fee or acquisition fee, or waives its right to be reimbursed for certain expenses. Neither our Business Manager nor IREIC has any obligation to provide us with advances or contributions, and our Business Manager is not obligated to defer, accrue or waive any portion of its business management fee, acquisition fee or reimbursements. Further, there is no assurance that any of these other sources will be available to fund distributions.
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There is no established public trading market for our shares, and our stockholders may not be able to sell their shares under our SRP, or otherwise.
There is no established public trading market for our shares and no assurance that one may develop. This may inhibit the transferability of our shares. Our charter does not require our directors to seek stockholder approval to liquidate our assets by a specified date, nor does our charter require our directors to list our shares for trading by a specified date. There is no assurance the board will pursue a listing or other liquidity event at any time in the future. In addition, even if our board decides to seek a listing of our shares of common stock, there is no assurance that we will satisfy the listing requirements or that our shares will be approved for listing. Thus, holders of our common stock should be prepared to hold their shares for an unlimited period of time. Our charter also prohibits the ownership of more than 9.8% in value of the aggregate of the outstanding shares of our stock or more than 9.8% (in value or number whichever is more restrictive) of the aggregate of the outstanding shares of our common stock by any single investor unless exempted by our board.
Moreover, our SRP contains numerous restrictions that limit our stockholders' ability to sell their shares, including those relating to the number of shares of our common stock that we can repurchase at any time and the funds we may use to repurchase shares pursuant to the program. Also, under the SRP, we are only authorized to purchase shares from stockholders who purchased their shares from us or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested, if we choose to repurchase them. The SRP will immediately terminate if our shares become listed for trading on a national securities exchange.
Our board of directors, in its sole discretion, may amend, suspend (in whole or in part), or terminate our SRP. Further, our board reserves the right in its sole discretion to change the repurchase prices or reject any requests for repurchases. Any amendments to, or suspension or termination of, the SRP may restrict or eliminate our stockholders’ ability to have us repurchase their shares and otherwise prevent our stockholders from liquidating their investment. Therefore, our stockholders may not have the opportunity to make a repurchase request prior to a potential termination of the SRP and our stockholders may not be able to sell any of their shares of common stock back to us. As a result of these restrictions and circumstances, the ability of our stockholders to sell their shares should they require liquidity is significantly restricted. Moreover, if our stockholders do sell their shares of common stock back to us pursuant to the SRP, they may be forced to do so at a discount to the purchase price such stockholders paid for their shares.
The Estimated Per Share NAV of our common stock is based on a number of assumptions and estimates that may not be accurate or complete and is also subject to a number of limitations.
On March 30, 2017, we announced an Estimated Per Share NAV of our common stock as of December 31, 2016 equal to $22.63 per share. To assist our board of directors in establishing the Estimated Per Share NAV, we engaged a third party specializing in providing real estate financial services. As with any methodology used to estimate value, the methodology employed by this third party was based upon a number of estimates and assumptions that may not have been accurate or complete. Further, different parties using different assumptions and estimates could have derived a different estimated per share net asset value, which could be significantly different from our Estimated Per Share NAV. The Estimated Per Share NAV will fluctuate over time and does not represent: (i) the price at which our shares would trade on a national securities exchange, (ii) the amount per share a stockholder would obtain if he, she or it tried to sell his, her or its shares, (iii) the amount per share stockholders would receive if we liquidated our assets and distributed the proceeds after paying all our expenses and liabilities or (iv) the price a third party would pay to acquire our Company.
There is also no assurance that the methodology used to estimate our value per share will be acceptable to broker dealers for customer account purposes or to the Financial Industry Regulatory Authority, Inc. (“FINRA”) or that the estimated value per share will satisfy the applicable annual valuation requirements under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Internal Revenue Code with respect to employee benefit plans subject to ERISA and other retirement plans or accounts subject to Section 4975 of the Internal Revenue Code.
Our charter authorizes us to issue additional shares of stock, which may reduce the percentage of our common stock owned by our other stockholders, subordinate stockholders’ rights or discourage a third party from acquiring us.
Existing stockholders do not have preemptive rights to purchase any shares issued by us in the future. Our charter authorizes us to issue up to 1,500,000,000 shares of capital stock, of which 1,460,000,000 shares are classified as common stock and 40,000,000 shares are classified as preferred stock. We may, in the sole discretion of our board:
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amend our charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series that we have authority to issue; or |
Future issuances of common stock will reduce the percentage of our outstanding shares owned by our other stockholders. Further, our board of directors could authorize the issuance of stock with terms and conditions that could subordinate the rights of the holders of our current common stock or have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for our stockholders.
Market disruptions may adversely impact many aspects of our operating results and operating condition.
The availability of debt financing secured by commercial real estate is subject to tightened underwriting standards. Further, interest rates have increased in the last two years, and may continue to increase, which may affect U.S. economic conditions as a whole, or real estate industry conditions such as:
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an increase in the number of bankruptcies or insolvency proceedings of our tenants and lease guarantors, which could delay our efforts to collect rent and any past balances due under the relevant leases and ultimately could preclude collection of these sums; |
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our ability to borrow on terms and conditions that we find acceptable may be limited, which could result in our investment operations (real estate assets) generating lower overall economic returns and a reduced level of cash flow from what was anticipated at the time we acquired the asset, which could potentially impact our ability to make distributions to our stockholders, or pursue acquisition opportunities, among other things, and increase our interest expense; |
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a reduction in the amount of capital that is available to finance real estate, which, in turn, could lead to a decline in real estate values generally, slow real estate transaction activity, and reduce the loan to value ratio upon which lenders are willing to lend; |
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the value of certain of our real estate assets may decrease below the amounts we pay for them, which would limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by these assets and could reduce the availability of unsecured loans; |
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the value and liquidity of short-term investments, if any, could be reduced as a result of the dislocation of the markets for our short-term investments and increased volatility in market rates for these investments or other factors; and |
For these and other reasons, we cannot assure our stockholders that we will be profitable or that we will realize growth in the value of our investments.
Our board of directors may change our investment policies without stockholder approval, which could alter the nature of our stockholders’ investment.
Our charter requires our independent directors to review our investment policies at least annually to determine that the policies we are following are in the best interest of our stockholders. These policies may change over time. The methods of implementing our investment policies may also vary, as new investment techniques are developed. Our investment policies, the methods for implementing them, and our other objectives, policies and procedures may be altered by a majority of the directors (which must include a majority of the independent directors), without the approval of our stockholders. As a result, the nature of our stockholders’ investment could change without their consent. A change in our investment strategy may, among other things, increase our exposure to interest rate risk, default risk and commercial real property market fluctuations, all of which could materially adversely affect our ability to achieve our investment objectives.
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Actions of our joint venture partners could negatively impact our performance.
We have entered into, may continue to enter into, joint ventures with third parties. Our organizational documents do not limit the amount of funds that we may invest in these joint ventures. We intend to develop and acquire properties through joint ventures with other persons or entities when warranted by the circumstances. The venture partners may share certain approval rights over major decisions and these investments may involve risks not otherwise present with other methods of investment in real estate, including, but not limited to:
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the current economic conditions make it more likely that our partner in an investment may become bankrupt, which would mean that we and any other remaining partner would generally remain liable for the entity’s liabilities; |
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that our partner may at any time have economic or business interests or goals which are or which become inconsistent with our business interests or goals, and we may not agree on all proposed actions to certain aspects of the venture; |
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that our partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives, including our objective to qualify as a REIT; |
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that, if our partners fail to fund their share of any required capital contributions, we may be required to contribute that capital; |
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that venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms; |
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that our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the agreements and, in each event, we may not continue to own or operate the interests or assets underlying the relationship or may need to purchase these interests or assets at an above-market price to continue ownership; |
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that disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business; and |
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that we may in certain circumstances be liable for our partner’s actions. |
The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to fund our capital and operating needs and distributions.
The Federal Deposit Insurance Corporation, or “FDIC,” generally only insures limited amounts per depositor per insured bank. The FDIC insures up to $250,000 per depositor per insured bank account. At December 31, 2017, we had cash and cash equivalents exceeding these federally insured levels. If any of the banking institutions in which we have deposited funds ultimately fail, we may lose our deposits over the federally insured levels. The loss of our deposits would reduce the amount of cash we have available to fund our capital and operating needs and distributions.
We rely on IREIC and its affiliates and subsidiaries to manage and conduct our operations. Any material adverse change in IREIC’s financial condition or our relationship with IREIC could have a material adverse effect on our business and ability to achieve our investment objectives.
We depend on IREIC and its affiliates and subsidiaries to manage and conduct our operations. IREIC, through one or more of its subsidiaries, owns and controls our Business Manager and Real Estate Manager. IREIC has sponsored numerous public and private programs and through its affiliates or subsidiaries has provided offering, asset, property and other management and ancillary services to these entities. From time to time, IREIC or the applicable affiliate or subsidiary has waived or deferred fees or made capital contributions to support these public or private programs. IREIC or its applicable affiliates or subsidiaries may waive or defer fees or make capital contributions in the future. Further, IREIC and its affiliates or subsidiaries may from time to time be parties to litigation or other claims arising from sponsoring these entities or providing these services. As such, IREIC and these other entities may incur costs, liabilities or other expenses arising from litigation or claims that are either not reimbursable or not covered by insurance. Future waivers or deferrals of fees, additional capital contributions or costs, liabilities or other expenses arising from litigation or claims could have a material adverse effect on IREIC’s financial condition and ability to fund our Business Manager or Real Estate Manager to the extent necessary.
If our Business Manager or Real Estate Manager lose or are unable to obtain key personnel, our ability to implement our investment strategies could be hindered.
Our success depends to a significant degree upon the contributions of certain of our executive officers and other key personnel of our Business Manager and Real Estate Manager. Neither we nor our Business Manager or Real Estate Manager has employment
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agreements with these persons, and we cannot guarantee that all, or any particular one, will continue to be available to provide services to us. If any of the key personnel of our Business Manager or Real Estate Manager were to cease their employment or other relationship with our Business Manager or Real Estate Manager, respectively, our results and ability to pursue our business plan could suffer. Further, we do not intend to separately maintain “key person” life insurance that would provide us with proceeds in the event of death or disability of these persons. We believe our future success depends, in part, upon the ability of our Business Manager and Real Estate Manager to hire and retain highly skilled managerial, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure our stockholders that our Business Manager or Real Estate Manager will be successful in attracting and retaining skilled personnel. If our Business Manager or Real Estate Manager lose or are unable to obtain the services of key personnel, our ability to implement our investment strategies could be delayed or hindered, and the value of our stockholders’ investment could decline.
If we become self-managed by internalizing our management functions, we may be unable to retain key personnel, and our ability to achieve our investment objectives could be delayed or hindered, which could adversely affect our ability to pay distributions to our stockholders and the value of their investments.
At some point in the future, we may consider becoming self-managed by internalizing the functions performed for us by our Business Manager. Even if we become self-managed, we may not be able to hire certain key employees of the Business Manager and its affiliates, even if we are allowed to offer them positions with our Company. Although we are generally restricted from soliciting these persons pursuant to certain provisions set forth in the business management agreement, during the one-year period after the Business Manager’s receipt of an internalization notice the Business Manager will permit us to solicit for hire the “key” employees of the Business Manager and its affiliates, including all of the persons serving as the executive officers of our Company or the Business Manager who do not also serve as directors or officers of any other IREIC-sponsored REITs. However, at any given moment, many or all of the executive officers of the Company and the Business Manager may also be serving as a director or officer of one or more other IREIC-sponsored REITs. Failure to hire or retain key personnel could result in increased costs and deficiencies in our disclosure controls and procedures or our internal control over financial reporting. These deficiencies could cause us to incur additional costs and divert management’s attention from most effectively managing our investments, which could result in us being sued and incurring litigation-associated costs in connection with the internalization transaction.
If we seek to internalize our management functions other than as provided for under our business management agreement, we could incur greater costs and lose key personnel.
Our board may decide that we should pursue an internalization by hiring our own group of executives and other employees or entering into an agreement with a third party, such as a merger, instead of by transitioning the services performed by, and hiring the persons providing services for, our Business Manager. The costs that we would incur in this case are uncertain and may be substantial. Further, we would lose the benefit of the experience of our Business Manager.
Further, if we seek to internalize the functions performed for us by our Real Estate Manager, the purchase price will be separately negotiated by our independent directors, or a committee thereof, and will not be subject to the transition procedures described in our business management agreement.
Our stockholders’ return on investment in our common stock may be reduced if we are required to register as an investment company under the Investment Company Act.
The Company is not registered, and does not intend to register itself or any of its subsidiaries, as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If we become obligated to register the Company or any of its subsidiaries as an investment company, the registered entity would have to comply with regulation under the Investment Company Act with respect to capital structure (including the registered entity’s ability to use borrowings), management, operations, transactions with affiliated persons (as defined in the Investment Company Act) and portfolio composition, including disclosure requirements and restrictions with respect to diversification and industry concentration, and other matters. Compliance with the Investment Company Act would limit our ability to make certain investments and require us to significantly restructure our operations and business plan. The costs we would incur and the limitations that would be imposed on us as a result of such compliance and restructuring would negatively affect the value of our common stock, our ability to make distributions and the sustainability of our business and investment strategies.
The Company conducts its operations, directly and through wholly or majority-owned subsidiaries, so that none of the Company and its subsidiaries is registered or will be required to register as an investment company under the Investment Company Act. Section 3(a)(1) of the Investment Company Act, in relevant part, defines an investment company as (i) any issuer that is, or holds itself out as being, engaged primarily in the business of investing, reinvesting or trading in securities, or (ii) any issuer that is engaged, or proposes
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to engage, in the business of investing, reinvesting, owning, holding or trading in securities and owns, or proposes to acquire, “investment securities” having a value exceeding 40% of the value of its total assets (exclusive of government securities and cash items) on an unconsolidated basis, which we refer to as the “40% test.” The term “investment securities” generally includes all securities except government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exemption from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. We believe we are not considered an investment company under Section 3(a)(1)(A) of the Investment Company Act because we do not engage primarily or hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities. Rather, we and our subsidiaries are primarily engaged in the business of investing in real property. We also conduct our operations and the operations of our subsidiaries in a manner designed so that we do not come within the definition of an investment company under Section 3(a)(1)(C) because less than 40% of the value of our adjusted total assets on an unconsolidated basis consist of “investment securities.” This requirement limits the types of businesses in which we may engage through our subsidiaries. Furthermore, the assets we and our subsidiaries may originate or acquire are limited by the provisions of the Investment Company Act and the rules and regulations promulgated under the Investment Company Act, which may adversely affect our business.
We and our subsidiaries also may rely upon the exemption from registration as an investment company pursuant to Section 3(c)(5)(C) of the Investment Company Act, which is available for entities “primarily engaged” in the business of “purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” As reflected in no-action letters, the SEC staff's position on Section 3(c)(5)(C) generally requires that at least 55% of an entity’s assets comprise qualifying real estate assets and that at least 80% of its assets must comprise qualifying real estate assets and real estate-related assets under the Investment Company Act. Specifically, we expect each of our subsidiaries relying on Section 3(c)(5)(C) to invest at least 55% of its assets in mortgage loans, certain mezzanine loans and other interests in real estate that constitute qualifying real estate assets in accordance with SEC staff guidance, and approximately an additional 25% of its assets in other types of mortgages, securities of REITs and other real estate-related assets such as debt and equity securities of companies primarily engaged in real estate businesses and securities issued by pass-through entities of which substantially all of the assets consist of qualifying real estate assets and/or real estate-related assets. The remaining 20% of the entity’s assets can consist of miscellaneous assets. These criteria may limit what we buy, sell and hold.
We classify our assets for purposes of Section 3(c)(5)(C) based in large measure upon no-action letters issued by the SEC staff and other interpretive guidance provided by the SEC and its staff or on our analysis of such guidance published with respect to other types of assets to determine which assets are qualifying real estate assets and real estate-related assets. However, the SEC’s guidance was issued in accordance with factual situations that may be substantially different from the factual situations we may encounter. No assurance can be given that the SEC will concur with how we classify our assets or the assets of our subsidiaries. The SEC may in the future take a view different than or contrary to our analysis with respect to the types of assets we have determined to be qualifying real estate assets or real estate-related assets. For example, on August 31, 2011 the SEC issued a concept release and request for comments regarding the Section 3(c)(5)(C) exemption (Release No. IC-29778) in which it contemplated the possibility of issuing new rules or providing new interpretations of the exemption that might, among other things, define the phrase “liens on and other interests in real estate” or consider sources of income in determining a company’s “primary business.” To the extent that the SEC or its staff provides more specific or different guidance, we may be required to adjust our strategy accordingly. Any additional guidance from the SEC or its staff could provide additional flexibility to us, or it could further inhibit our ability to pursue the strategies we have chosen. If we are required to re-classify our assets, we may no longer be in compliance with the exclusion from the definition of an “investment company” provided by Section 3(c)(5)(C) of the Investment Company Act. There can be no assurance that the laws and regulations governing the Investment Company Act status of REITs, including the SEC or its staff providing more specific or different guidance regarding these exemptions, will not change in a manner that adversely affects our operations.
Certain of our subsidiaries may rely on the exemption provided by Section 3(c)(6) to the extent that they hold mortgage assets through majority-owned subsidiaries that rely on the exemption provided by Section 3(c)(5)(C). The SEC staff has issued little interpretive guidance with respect to Section 3(c)(6) and any guidance published by the staff could require us to adjust our strategy accordingly.
A change in the value of any of our assets could cause us to fall within the definition of “investment company” and negatively affect our ability to be free from registration and regulation under the Investment Company Act. To avoid being required to register the Company or any of its subsidiaries as an investment company under the Investment Company Act, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. Sales may be required during adverse market conditions, and we could be forced to accept a price below that which we would otherwise consider appropriate. In addition, we may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forgo opportunities to acquire interests in companies that we would otherwise want to acquire and would be important to our investment strategy. Furthermore, if the value of securities issued by our subsidiaries that are exempted from the definition of “investment company” by Sections 3(c)(1) or 3(c)(7) of the Investment Company Act, together with any other investment securities we own, exceeds 40% of our adjusted total assets on an unconsolidated basis, or if one or more of such subsidiaries fail to maintain an
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exemption from registration under the Investment Company Act, we could, among other things, be required to substantially change the manner in which we conduct our operations to avoid being required to register as an investment company, effect sales of our assets in a manner that, or at a time when, we would not otherwise choose to do so or register as an investment company. Any of these activities could negatively affect the value of our common stock, our ability to make distributions and the sustainability of our business and investment strategies, which may have a material adverse effect on our business, results of operations and financial condition.
If we were required to register the Company or any of its subsidiaries as an investment company but failed to do so, we or the applicable subsidiary would be prohibited from engaging in our or its business, and criminal and civil actions could be brought against us or the applicable subsidiary. In addition, our contracts would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business.
The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our three primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, and private data exposure. We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.
A failure of our information technology (IT) infrastructure could adversely impact our business and operations.
We rely upon the capacity, reliability and security of our information technology infrastructure and our ability to expand and continually update this infrastructure in response to changing needs of our business. We face the challenge of supporting older systems and hardware and implementing necessary upgrades to our IT infrastructure. We may not be able to successfully implement these upgrades in an effective manner. In addition, we may incur significant increases in costs and extensive delays in the implementation and rollout of any upgrades or new systems. If there are technological impediments, unforeseen complications, errors or breakdowns in implementation, the disruptions could have an adverse effect on our business and financial condition.
Risks Related to Investments in Real Estate
There are inherent risks with real estate investments.
Investments in real estate assets are subject to varying degrees of risk. For example, an investment in real estate cannot generally be quickly sold, limiting our ability to promptly vary our portfolio in response to changing economic, financial and investment conditions. Investments in real estate assets also are subject to adverse changes in general economic conditions which, for example, reduce the demand for rental space.
Among the factors that could impact our real estate assets and the value of an investment in us are:
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local conditions such as an oversupply of space or reduced demand for properties of the type that we acquire; |
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inability to collect rent from tenants; |
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vacancies or inability to rent space on favorable terms; |
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inflation and other increases in operating costs, including insurance premiums, utilities and real estate taxes; |
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the relative illiquidity of real estate investments; |
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changing market demographics; |
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an inability to acquire and finance real estate assets on favorable terms, if at all; |
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changes or increases in interest rates and availability of financing. |
In addition, periods of economic slowdown or recession, or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or increased defaults under existing leases.
Our real estate assets may be subject to impairment charges.
Periodically, we assess whether there are any indicators that the value of our real estate properties and other investments may be impaired. Under U.S. GAAP, a property’s value is impaired only if the estimate of the aggregate future cash flows to be generated by the property is less than the carrying value of the property. The valuation and possible subsequent impairment of real estate properties and other investments is a significant estimate that can change based on our continuous process of analyzing each property and reviewing assumptions about uncertain inherent factors, as well as the economic condition of the property at a particular point in time. We are required to make subjective assessments as to whether there are impairments in the value of our real estate properties and other investments.
Determining whether a property is impaired and, if impaired, the amount of write-down to fair value requires a significant amount of judgment by management and is based on the best information available to management at the time of evaluation. There can be no assurance that we will not take charges in the future related to the impairment of our assets. Any future impairment could have a material adverse effect on our results of operations in the period in which the charge is taken. For the year ended December 31, 2017, we recognized an impairment charge related to an investment property of $8.5 million. During the years ended December 31, 2016 and 2015, we incurred no impairment charges. For further information related to impairment provision, reference is made to Note 15 – “Fair Value Measurements” which is included in our December 31, 2017 Notes to Consolidated Financial Statements in Item 8.
Economic conditions in the United States have had, and may continue to have, an adverse impact on the retail industry generally. Slow or negative growth in the retail industry could result in defaults by retail tenants which could have an adverse impact on our financial operations.
Economic conditions in the United States have had an adverse impact on the retail industry generally. As a result, the retail industry is facing reductions in sales revenues and increased bankruptcies throughout the United States. The continuation of adverse economic conditions may result in an increase in distressed or bankrupt retail companies, which in turn would result in an increase in defaults by tenants at our commercial properties. Additionally, slow economic growth is likely to hinder new entrants into the retail market which may make it difficult for us to fully lease space at our retail properties or retail properties we plan to acquire. Tenant defaults and decreased demand for retail space would have an adverse impact on the value of our retail properties and any additional retail properties we acquire and our results of operations.
E-commerce can have an impact on our business.
The use of the internet by consumers continues to gain popularity. The migration towards e-commerce is expected to continue. This increase in internet sales could result in a downturn in the business of our current tenants in their “brick and mortar” locations and could affect the way future tenants lease space. While we devote considerable effort and resources to analyze and respond to tenant trends, preferences and consumer spending patterns, we cannot predict with certainty what future tenants will want, what future retail spaces will look like and how much revenue will be generated at traditional “brick and mortar” locations. If we are unable to anticipate and respond promptly to trends in the market, our occupancy levels and rental amounts may decline.
We face significant competition in the leasing market, which may decrease or prevent increases in the occupancy and rental rates of our properties.
As of December 31, 2017, we owned 59 properties located in 24 states. We compete with numerous developers, owners and operators of commercial properties, many of which own properties similar to, and in the same market areas as, our properties. If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge in order to attract new tenants or retain existing tenants when their leases expire. To the extent we are unable to renew leases or re-let space as leases expire, it would result in decreased cash flow from tenants and reduce the income produced by our properties. Excessive vacancies (and related reduced shopper traffic) at one of our properties may hurt sales of other tenants at that property and may discourage them from renewing leases. Also, if our competitors develop additional properties in locations near our properties, there may be increased competition for creditworthy tenants, which may require us to make capital improvements to properties that we would not have otherwise made.
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We depend on tenants for our revenue, and accordingly lease terminations, tenant default, and bankruptcies could adversely affect the income produced by our properties.
The success of our investments depends on the financial stability of our tenants. Certain economic conditions may adversely affect one or more of our tenants. For example, business failures and downsizings may contribute to reduced consumer demand for retail products and services which would impact tenants of our retail properties. In addition, our retail shopping center properties typically are anchored by large, nationally recognized tenants, any of which may experience a downturn in their business that may weaken significantly their financial condition. Further, mergers or consolidations among large retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations, which could include tenants at our retail properties.
As a result of these factors, our tenants may delay lease commencements, decline to extend or renew their leases upon expiration, fail to make rental payments, or declare bankruptcy. Any of these actions could result in the termination of the tenants' leases, the expiration of existing leases without renewal, or the loss of rental income attributable to the terminated or expired leases. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment and re-leasing our property.
Our revenue is impacted by the success and economic viability of our anchor retail tenants. Our reliance on single or significant tenants in certain buildings may decrease our ability to lease vacated space and adversely affect the returns on our stockholders’ investment.
In the retail sector, a tenant occupying all or a large portion of the gross leasable area of a retail center, commonly referred to as an anchor tenant, may become insolvent, may suffer a downturn in business, or may decide not to renew its lease. Any of these events would result in a reduction or cessation in rental payments to us and would adversely affect our financial condition. A lease termination by an anchor tenant could result in lease terminations or reductions in rent by other tenants whose leases may permit cancellation or rent reduction if another tenant’s lease is terminated. Similarly, the leases of some anchor tenants may permit the anchor tenant to transfer its lease to another retailer. The transfer to a new anchor tenant could cause customer traffic in the retail center to decrease and thereby reduce the income generated by that retail center. A lease transfer to a new anchor tenant could also allow other tenants to make reduced rental payments or to terminate their leases in accordance with lease terms. In the event that we are unable to re-lease the vacated space to a new anchor tenant, we may incur additional expenses in order to remodel the space to be able to re-lease the space to more than one tenant.
If a tenant declares bankruptcy, we may be unable to collect balances due under relevant leases.
Any of our tenants or any guarantor of a tenant’s lease obligations could be subject to a bankruptcy proceeding in pursuit of Title 11 of the bankruptcy laws of the United States. A bankruptcy filing of our tenants or any guarantor of a tenant’s lease obligations would bar all efforts to collect pre-bankruptcy debts from these entities or their properties, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be paid currently. If a lease is assumed, all pre-bankruptcy balances owing under it must be paid in full. If a lease is rejected by a tenant in bankruptcy, we would only have a general unsecured claim for damages. If a lease is rejected, it is unlikely we would receive any payments from the tenant because our claim is capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid. This claim could be paid only if the funds were available, and then only in the same percentages as that realized on other unsecured claims.
A tenant or lease guarantor bankruptcy could delay efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. A tenant or lease guarantor bankruptcy could cause a decrease or cessation of rental payments that would mean a reduction in our cash flow and the amount available for distributions to our stockholders. In the event of a bankruptcy there can be no assurance that the tenant or its trustee will assume our lease. If a given lease or guaranty of a lease is not assumed, our cash flow and the amounts available for distributions to our stockholders may be adversely affected.
Our portfolio included three stores leased to Sports Authority, which filed for bankruptcy in 2016. Two of our three Sports Authority leases were rejected on June 30, 2016, and the third one was rejected July 29, 2016. The annualized rent and reimbursements under these leases would have totaled approximately $2.2 million. We executed a lease agreement with Ross Dress for Less on December 29, 2017 for 22,322 square feet of the former Sports Authority store located at our Omaha, Nebraska asset. In addition, we have signed a letter of intent with a regional fitness operator for our Mansfield, Texas location. Lastly, we have a temporary tenant occupying space at our Lake St. Louis, Missouri asset while we continue to seek a quality replacement tenant for that space.
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Inflation may adversely affect our financial condition and results of operations.
Increases in the rate of inflation may adversely affect our net operating income from leases with stated rent increases or limits on the tenant’s obligation to pay its share of operating expenses, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending, which may impact our tenants’ sales and, with respect to those leases including percentage rent clauses, our average rents.
We may be restricted from re-leasing space at our retail properties.
Leases with retail tenants may contain provisions giving the particular tenant the exclusive right to sell particular types of merchandise or provide specific types of services within the particular retail center. These provisions may limit the number and types of prospective tenants interested in leasing space in a particular retail property.
We have entered into long-term leases with some of our retail tenants, and those leases may not result in fair value over time, which could adversely affect our revenues and ability to make distributions.
We have entered into long-term leases with some of our retail tenants. Long-term leases do not allow for significant changes in rental payments and do not expire in the near term. If we do not accurately judge the potential for increases in market rental rates when negotiating these long-term leases, significant increases in future property operating costs could result in receiving less than fair value from these leases. These circumstances would adversely affect our revenues and funds available for distribution.
Retail conditions may adversely affect our income.
A retail property’s revenues and value may be adversely affected by a number of factors, many of which apply to real estate investment generally, but which also include trends in the retail industry and perceptions by retailers or shoppers of the safety, convenience and attractiveness of the retail property. Our properties are located in public places, and any incidents of crime or violence, including acts of terrorism, would result in a reduction of business traffic to tenant stores in our properties. Any such incidents may also expose us to civil liability. In addition, to the extent that the investing public has a negative perception of the retail sector, the value of our retail properties may be negatively impacted.
A number of our retail leases are based on tenant gross sales. Under those leases which are based on the gross sales of our tenants, our revenue from tenants may increase as the sales of our tenants increase. Generally, retailers face declining revenues during downturns in the economy. As a result, the portion of our revenue which may derive from percentage rent leases could be adversely affected by a general economic downturn.
Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect our operations.
From time to time, we have acquired multiple properties in a single transaction. Portfolio acquisitions typically are more complex and expensive than single property acquisitions, and the risk that a multiple-property acquisition does not close may be greater than in a single-property acquisition. Portfolio acquisitions may also result in us owning investments in geographically dispersed markets, placing additional demands on our Business Manager and Real Estate Manager in managing the properties in the portfolio. In addition, a seller may require that a group of properties be purchased as a package even though we may not want to purchase one or more properties in the portfolio. In these situations, if we are unable to identify another person or entity to acquire the unwanted properties, we may be required to operate or attempt to dispose of these properties. We also may be required to accumulate a large amount of cash to fund such acquisitions. We would expect the returns that we earn on such cash to be less than the returns on real property. Therefore, acquiring multiple properties in a single transaction may reduce the overall yield on our portfolio.
Short-term leases may expose us to the effects of declining market rent.
Some of our properties have short-term leases with tenants. There is no assurance that we will be able to renew these leases as they expire or attract replacement tenants on comparable terms, if at all. Therefore, the returns we earn on this type of investment may be more volatile than the returns generated by properties with longer term leases.
We do not own or control the land in any ground lease properties that we have or may acquire.
We have and may continue to acquire property on land owned by a third party known as a “leasehold interest.” Although we have a right to use the property, we do not retain fee ownership in the underlying land. Accordingly, we will have no economic interest in the land or building at the expiration of the leasehold interest. As a result, we will not share in any increase in value of the land associated with the underlying property. Further, because we do not control the underlying land, the lessor could take certain actions to disrupt our rights in the property or our tenants’ operation of the properties.
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We may be unable to sell assets if or when we decide to do so.
Maintaining our REIT qualification and continuing to avoid registration under the Investment Company Act as well as many other factors, such as general economic conditions, the availability of financing, interest rates and the supply and demand for the particular asset type, may limit our ability to sell real estate assets. Many of these factors are beyond our control. We cannot predict whether we will be able to sell any real estate asset on favorable terms and conditions, if at all, or the length of time needed to sell an asset.
Sale leaseback transactions may be re-characterized in a manner unfavorable to us.
We may from time to time enter into a sale leaseback transaction where we purchase a property and then lease the property to the seller. The transaction may, however, be characterized as a financing instead of a sale in the case of the seller’s bankruptcy. In this case, we would not be treated as the owner of the property but rather as a creditor with no interest in the property itself. The seller may have the ability in a bankruptcy proceeding to restructure the financing by imposing new terms and conditions. The transaction also may be re-characterized as a joint venture. In this case, we would be treated as a joint venture with liability, under some circumstances, for debts incurred by the seller relating to the property.
Operating expenses may increase in the future and to the extent these increases cannot be passed on to our tenants, our cash flow and our operating results would decrease.
Operating expenses, such as expenses for fuel, utilities, labor, building materials and insurance, are not fixed and may fluctuate from time to time. Unless specifically provided for in a lease, there is no guarantee that we will be able to pass increases on to our tenants. To the extent these increases cannot be passed on to our tenants, any increases would cause our cash flow and our operating results to decrease, which could have a material adverse effect on our ability to pay or sustain distributions.
We may incur costs associated with the termination of our membership interest in the insurance association captive.
We were a member of an insurance association captive (“Captive”) that terminated its operations in March 2016 and dissolved in the fourth quarter 2017. We may, however, be liable for unidentified costs associated with the termination of the Captive.
We depend on the availability of public utilities and services, especially for water and electric power. Any reduction, interruption or cancellation of these services may adversely affect us.
Public utilities, especially those that provide water and electric power, are fundamental for the operation of our assets. The delayed delivery or any material reduction or prolonged interruption of these services could allow certain tenants to terminate their leases or result in an increase in our costs, as we may be forced to use backup generators, which also could be insufficient to fully operate our facilities and could result in our inability to provide services. Accordingly, any interruption or limitation in the provision of these essential services may adversely affect us.
An increase in real estate taxes may decrease our income from properties.
Some local real property tax assessors may seek to reassess some of our properties as a result of our acquisition of the property. Generally, from time to time our property taxes will increase as property values or assessment rates change or for other reasons deemed relevant by the assessors. In fact, property taxes may increase even if the value of the underlying property declines. An increase in the assessed valuation of a property for real estate tax purposes will result in an increase in the related real estate taxes on that property. Although some tenant leases may permit us to pass through the tax increases to the tenants for payment, there is no assurance that renewal leases or future leases will be negotiated on the same basis. Increases not passed through to tenants will adversely affect our cash flow from operations and our ability to pay distributions.
Potential development and construction delays and resulting increased costs and risks may reduce cash flow from operations.
From time to time we may acquire unimproved real property or properties that are under development or construction. Investments in these properties will be subject to the uncertainties generally associated with real estate development and construction, including those related to re-zoning land for development, environmental concerns of governmental entities or community groups and the developers’ ability to complete the property in conformity with plans, specifications, budgeted costs and timetables. If a developer fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance. A developer’s performance may also be affected or delayed by conditions beyond the developer’s control. Delays in completing construction could also give tenants the right to terminate leases. We may incur additional risks when we make periodic progress payments or other advances to developers before they complete construction. These and other factors can result in increased costs of a project or loss of
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our investment. In addition, we will be subject to lease-up risks associated with newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a purchase price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and the return on our investment could suffer.
If we contract with a development company for newly developed property, our earnest money deposit made to the development company may not be fully refunded.
We may enter into one or more contracts, either directly or indirectly through joint ventures with third parties, to acquire real property from a development company that is engaged in construction and development of commercial real estate. We may be required to pay a substantial earnest money deposit at the time of contracting with a development entity. At the time of contracting and the payment of the earnest money deposit by us, the development company typically will have only a contract to acquire land, a development agreement to develop a building on the land and an agreement with one or more tenants to lease all or part of the property upon its completion. If the development company fails to develop the property or all or a specified portion of the pre-leased tenants fail to take possession under their leases for any reason, we may not be able to obtain a refund of our earnest money deposit.
We may obtain only limited warranties when we purchase a property and would have only limited recourse in the event our due diligence did not identify any issues that lower the value of our property.
The seller of a property often sells the property in its “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property, as well as the loss of rental income from that property.
Uninsured losses or premiums for insurance coverage may adversely affect our returns.
The nature of the activities at certain properties may expose us and our tenants or operators to potential liability for personal injuries and, in certain instances, property damage claims. In addition, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential terrorist acts could sharply increase the premiums we pay for coverage against property and casualty claims. These policies may or may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We cannot provide any assurance that we will have adequate coverage for these losses. In the event that any of our properties incurs a casualty loss that is not fully covered by insurance, the value of the particular asset will likely be reduced by the uninsured loss. In addition, we cannot provide any assurance that we will be able to fund any uninsured losses.
The costs of complying with environmental laws and other governmental laws and regulations may adversely affect us.
All real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, and the remediation of contamination associated with disposals. We also are required to comply with various local, state and federal fire, health, life-safety and similar regulations. Some of these laws and regulations may impose joint and several liability on tenants, owners or operators for the costs of investigating or remediating contaminated properties. These laws and regulations often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances. The cost of removing or remediating could be substantial. In addition, the presence of these substances, or the failure to properly remediate these substances, may adversely affect our ability to sell or rent a property or to use the property as collateral for borrowing.
Environmental laws and regulations also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures by us. Environmental laws and regulations provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with exposure to released hazardous substances. Compliance with new or more stringent laws or regulations or stricter interpretations of existing laws may require material expenditures by us. For example, various federal, regional and state laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. Among other
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things, “green” building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management. These requirements could increase the costs of maintaining or improving our existing properties or developing new properties.
We may acquire properties in regions that are particularly susceptible to natural disasters, which may make us susceptible to adverse climate developments from the effects of these natural disasters in those areas.
Our properties are located in certain geographical areas that may be impacted by adverse events such as hurricanes, floods, wildfires, earthquakes, blizzards or other natural disasters, which could cause a loss of revenues at our real estate properties. In addition, according to some experts, global climate change could result in heightened severe weather, thus further impacting these geographical areas. Natural disasters in these areas may cause damage to our properties beyond the scope of our insurance coverage, thus requiring us to make substantial expenditures to repair these properties and resulting in a loss of revenues from these properties. Any properties located near either coast will be exposed to more severe weather than properties located inland. These losses may not be insured or insurable at an acceptable cost. Elements such as water, wind, hail, fire damage and humidity in these areas can increase or accelerate wear on the properties’ weatherproofing and mechanical, electrical and other systems, and cause mold issues over time. As a result, we may incur additional operating costs and expenditures for capital improvements at properties in these areas.
Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.
The presence of mold at any of our properties could require us to undertake a costly program to remediate, contain or remove the mold. Mold growth may occur when moisture accumulates in buildings or on building materials. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing because exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. The presence of mold could expose us to liability from our tenants, their employees and others if property damage or health concerns arise.
We may incur significant costs to comply with the Americans With Disabilities Act or similar laws.
Our properties generally are subject to the Americans With Disabilities Act of 1990, as amended, which we refer to as the Disabilities Act. Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services be made accessible and available to people with disabilities.
The requirements of the Disabilities Act could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. We attempt to acquire properties that comply with the Disabilities Act or place the burden on the seller or other third party, such as a tenant, to ensure compliance with these laws. However, we cannot assure our stockholders that we will be able to acquire properties or allocate responsibilities in this manner. We may incur significant costs to comply with these laws.
Terrorist attacks and other acts of violence or war may affect the markets in which we operate our operations and our profitability.
We may acquire properties located in areas that are susceptible to attack. These attacks may directly impact the value of our assets through damage, destruction, loss or increased security costs. Although we may obtain terrorism insurance, we may not be able to obtain sufficient coverage to fund any losses we may incur. Risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Further, certain losses resulting from these types of events are uninsurable or not insurable at reasonable costs.
More generally, any terrorist attack, other act of violence or war, including armed conflicts, could result in increased volatility in, or damage to, the United States and worldwide financial markets and economy.
Risks Associated with Investments in Securities
Through owning real estate-related equity securities, we will be subject to the risks impacting each entity’s assets.
We may invest in real estate-related securities. Equity securities are always unsecured and subordinated to other obligations of the issuer. Investments in real estate-related equity securities are subject to the risks associated with investing directly in real estate assets and numerous additional risks including: (1) limited liquidity in the secondary trading market in the case of unlisted or thinly traded securities; (2) substantial market price volatility resulting from, among other things, changes in prevailing interest rates in the overall
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market or related to a specific issuer, as well as changing investor perceptions of the market as a whole, REIT or real estate securities in particular or the specific issuer in question; (3) subordination to the liabilities of the issuer; (4) the possibility that earnings of the issuer may be insufficient to meet its debt service obligations or to pay distributions; and (5) with respect to investments in real estate-related preferred equity securities, the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to redeem the securities. In addition, investments in real estate-related securities involve special risks relating to the particular issuer of the securities, including the financial condition and business outlook of the issuer. Investing in real estate-related securities will expose our results of operations and financial condition to the factors impacting the trading prices of publicly-traded entities.
Recent market conditions and the risk of continued market deterioration may reduce the value of any real estate-related securities in which we may invest.
Mortgage loans experienced higher than historical rates of delinquency, foreclosure and loss during the dislocations in the world credit markets in recent years. These and other related events significantly impacted the capital markets associated not only with mortgage-backed securities, asset-backed securities and collateralized debt obligations, but also the world credit and financial markets as a whole. Investing significant amounts in real estate-related securities, including CMBS, will expose our results of operations and financial condition to the volatility of the credit markets.
Because there may be significant uncertainty in the valuation of, or in the stability of the value of, certain securities holdings, the fair values of these investments might not reflect the prices that we would obtain if we sold these investments. Furthermore, these investments are subject to rapid changes in value caused by sudden developments that could have a material adverse effect on the value of these investments, and cause us to incur impairment charges or unrealized losses.
Investments in CMBS are subject to all of the risks of the underlying mortgage loans and the risks of the securitization process.
CMBS are securities that evidence interests in, or are secured by, a single commercial mortgage loan or a pool of commercial mortgage loans. Accordingly, these securities are subject to all of the risks of the underlying mortgage loans. In a changing interest rate environment, the value of CMBS may be adversely affected when payments on underlying mortgages do not occur as anticipated, resulting in the extension of the security’s effective maturity and the related increase in interest rate sensitivity of a longer-term instrument. The value of CMBS may also change due to shifts in the market’s perception of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole. In addition, CMBS are subject to the credit risk associated with the performance of the underlying mortgage properties. In certain instances, third-party guarantees or other forms of credit support designed to reduce credit risk may not be effective due, for example, to defaults by third party guarantors.
CMBS are also subject to several risks created through the securitization process. Generally, CMBS are issued in classes or tranches similar to mortgage loans. To the extent that we invest in a subordinate class or tranche, we will be paid interest only to the extent that there are funds available after paying the senior class. To the extent the collateral pool includes delinquent loans, subordinate classes will likely not be fully paid. Subordinate CMBS are also subject to greater credit risk than those CMBS that are more highly rated. Further, the ratings assigned to any particular class of CMBS may prove to be inaccurate. Thus, any particular class of CMBS may be riskier and more volatile than the rating may suggest, all of which may cause the returns on any CMBS investment to be less than anticipated.
Risks Associated with Debt Financing
Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur.
The domestic and international commercial real estate debt markets continue to be challenging resulting in, among other things, the tightening of underwriting standards by lenders and credit rating agencies, which could limit the availability of credit and increase costs for what is available. If the overall cost of borrowing increases, either by increases in the index rates or by increases in lender spreads, the increased costs may result in existing or future acquisitions generating lower overall economic returns and potentially reducing future cash flow available for distribution. If these disruptions in the debt markets persist, our ability to borrow monies to finance the purchase of, or other activities related to, real estate assets will be negatively impacted. In addition, we may find it difficult, costly or impossible to refinance indebtedness which is maturing. If we are unable to borrow monies on terms and conditions that we find acceptable, the return on our properties may be lower.
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Further, economic conditions could negatively impact commercial real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our real estate portfolio and in the collateral securing any loan investments we may make, which could have various negative impacts. Specifically, the value of collateral securing any loan investment we may make could decrease below the outstanding principal amounts of such loans, requiring us to pledge more collateral.
Borrowings may reduce the funds available for distribution and increase the risk of loss since defaults may cause us to lose the properties securing the loans.
We have acquired properties by either borrowing monies or, in some instances, by assuming existing financing. We typically borrow money to finance a portion of the purchase price of assets we acquire. In some instances, we have acquired properties by borrowing monies in an amount equal to the purchase price of the acquired properties. We may also borrow money for other purposes to, among other things, satisfy the requirement that we distribute at least 90% of our “REIT annual taxable income,” subject to certain adjustments and excluding any net capital gain, or as is otherwise necessary or advisable to assure that we continue to qualify as a REIT for federal income tax purposes. Over the long term, however, payments required on any amounts we borrow reduce the funds available for, among other things, acquisitions, capital expenditures for existing properties or distributions to our stockholders because cash otherwise available for these purposes is used to pay principal and interest on this debt.
If there is a shortfall between the cash flow from a property and the cash flow needed to service mortgage debt secured by a property, then the amount of cash flow from operations available for distributions to stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In such a case, we could lose the property securing the loan that is in default, thus reducing the value of our stockholders’ investment. For tax purposes, a foreclosure is treated as a sale of the property or properties for a purchase price equal to the outstanding balance of the debt secured by the property or properties. If the outstanding balance of the debt exceeds our tax basis in the property or properties, we would recognize taxable gain on the foreclosure action and we would not receive any cash proceeds. We also may fully or partially guarantee any monies that subsidiaries borrow to purchase or operate properties. In these cases, we will likely be responsible to the lender for repaying the loans if the subsidiary is unable to do so. If any mortgage contains cross-collateralization or cross-default provisions, more than one property may be affected by a default.
If we are unable to borrow at favorable rates, we may not be able to acquire new properties.
If we are unable to borrow money at favorable rates, we may be unable to acquire additional real estate assets or refinance existing loans at maturity. Further, we have obtained and may continue to enter into loan agreements or other credit arrangements that require us to pay interest on amounts we borrow at variable or “adjustable” rates. Increases in interest rates will increase our interest costs. If interest rates are higher when we refinance our loans, our expenses will increase and we may not be able to pass on this added cost in the form of increased rents, thereby reducing our cash flow and the amount available for distribution to our stockholders. Further, during periods of rising interest rates, we may be forced to sell one or more of our properties in order to repay existing loans, which may not permit us to maximize the return on the particular properties being sold. At December 31, 2017, we had $138.0 million or 19.9% of our total debt that bore interest at variable rates with a weighted average interest rate equal to 3.2%. We had variable rate debt subject to swap agreements fixing the rate of $383.5 million or 55.3% of our total debt at December 31, 2017.
Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.
We have obtained, and may continue to enter into, mortgage indebtedness that does not require us to pay principal for all or a portion of the life of the debt instrument. During the period when no principal payments are required, the amount of each scheduled payment is less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan is not reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal required during this period. After the interest-only period, we may be required either to make scheduled payments of principal and interest or to make a lump-sum or “balloon” payment at or prior to maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan if we do not have funds available or are unable to refinance the obligation.
Our loan documents may restrict certain aspects of our operations, which could, among other things, limit our ability to make distributions to our stockholders.
The terms and conditions contained in certain of our loan documents require us to maintain cash reserves, limit the aggregate amount we may borrow on a secured and unsecured basis, require us to satisfy restrictive financial covenants, prevent us from entering into certain business transactions, such as a merger, sale of assets or other business combination, restrict our leasing operations, require us
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to obtain consent from the lender to complete transactions or make investments that are ordinarily approved only by our board of directors or impose limits on our ability to pay distributions. In addition, secured lenders may restrict our ability to discontinue insurance coverage on a mortgaged property even though we may believe that the insurance premiums paid to insure against certain losses, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, are greater than the potential risk of loss.
The financial covenants under our credit agreement may restrict our ability to make distributions and our operating and acquisition activities. If we breach the financial covenants we could be held in default under the credit agreement, which could accelerate our repayment date and materially adversely affect our liquidity and financial condition.
We entered into a credit agreement, as amended, with KeyBanc Capital Markets Inc. for a $110 million revolving credit facility (the “Credit Facility”). The credit agreement provides us with the ability from time to time to increase the size of the Credit Facility, subject to certain conditions. Our performance of the obligations under the credit agreement, including the payment of any outstanding indebtedness, is secured by a minimum pool of five unencumbered properties with an unencumbered pool value of $110 million or above and by a guaranty by certain of our subsidiaries. As of December 31, 2017, we have borrowed $83.8 million of the $110 million available.
The credit agreement requires compliance with certain financial covenants, including, among other conditions, a minimum tangible net worth requirement, restrictions on indebtedness, a distribution limitation and other material covenants. These covenants could inhibit our ability to make distributions to our stockholders and to pursue certain business initiatives or effect certain transactions that might otherwise be beneficial to us. For example, without lender consent, we may not declare and pay distributions or honor any redemption requests if any default under the agreement then exists or if distributions, excluding any distributions reinvested through our DRP, for the then-current quarter and the three immediately preceding quarters would exceed 95% of our Funds from Operations, or “FFO,” excluding acquisition expenses, or “adjusted FFO,” for that period. For the fiscal quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017, distributions did not exceed 95% of our adjusted FFO.
The credit agreement also provides for several customary events of default, including, among other things, the failure to comply with our covenants and the failure to pay when amounts outstanding under the credit agreement become due. Declaration of a default by the lenders under the credit agreement could restrict our ability to borrow additional monies and could cause all amounts to become immediately due and payable, which would materially adversely affect our liquidity and financial condition.
We may acquire or finance properties with lock-out provisions, which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
The terms and conditions contained in certain of our loan documents preclude us from pre-paying the principal amount of the loan or could restrict us from selling or otherwise disposing of or refinancing properties. For example, lock-out provisions prohibit us from reducing the outstanding indebtedness secured by certain of our properties, refinancing this indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness secured by our properties. Lock-out provisions could impair our ability to take other actions during the lock-out period. In particular, lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control even though that disposition or change in control might be in the best interests of our stockholders.
To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective.
From time to time, we have used, and may continue to use, derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from our current hedging strategy. There is no assurance that our hedging strategy will achieve our objectives. We may be subject to costs, such as transaction fees or breakage costs, if we terminate these arrangements.
To the extent that we use derivative financial instruments to hedge against interest rate fluctuations, we will be exposed to credit risk, basis risk and legal enforceability risks. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract, increasing the risk that we may not realize the benefits of these instruments. There is a risk that counterparties could fail, shut down, file for bankruptcy or be unable to pay out contracts. The failure of a counterparty that holds collateral that we post in connection with an interest rate swap agreement could result in the loss of that collateral.
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We may be contractually obligated to purchase property even if we are unable to secure financing for the acquisition.
We expect to finance a portion of the purchase price for each property that we acquire. However, to ensure that our offers are as competitive as possible, we do not expect to enter into contracts to purchase property that include financing contingencies. Thus, we may be contractually obligated to purchase a property even if we are unable to secure financing for the acquisition. In this event, we may choose to close on the property by using cash on hand, which would result in less cash available for our operations and distributions to stockholders. Alternatively, we may choose not to close on the acquisition of the property and default on the purchase contract. If we default on any purchase contract, we could lose our earnest money and become subject to liquidated or other contractual damages and remedies.
The total amount we may borrow is limited by our charter.
We may borrow up to 300% of our net assets, equivalent to 75% of the cost of our assets. We may exceed this limit only if our board of directors (including a majority of our independent directors) determines that a higher level is appropriate. This limit could adversely affect our business, including:
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limiting our ability to purchase real estate assets; |
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causing us to lose our REIT status if we cannot borrow to fund the monies needed to satisfy the REIT distribution requirements; |
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causing operational problems if there are cash flow shortfalls for working capital purposes; and |
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causing the loss of a property if, for example, financing is necessary to cure a default on a mortgage. |
Risks Related to Conflicts of Interest
IREIC may face a conflict of interest in allocating personnel and resources between its affiliates, our Business Manager and our Real Estate Manager.
We do not have any employees. We rely on persons performing services for our Business Manager and Real Estate Manager and their affiliates to manage our day-to-day operations. Some of these persons also provide services to one or more investment programs currently or previously sponsored by IREIC. These individuals face competing demands for their time and service, and are required to allocate their time between our business and assets and the business and assets of IREIC, its affiliates and the other programs formed and organized by IREIC. Certain of these individuals have fiduciary duties to both us and our stockholders. If these persons are unable to devote sufficient time or resources to our business due to the competing demands of the other programs, they may violate their fiduciary duties to us and our stockholders, which could harm our business and we may be unable to maintain or increase the value of our assets, and our operating cash flows and ability to pay distributions could be adversely affected.
In addition, if another investment program sponsored by IREIC decides to internalize its management functions in the future, it may do so by hiring and retaining certain of the persons currently performing services for our Business Manager and Real Estate Manager, and if it did so, would likely not allow these persons to perform services for us.
We do not have arm’s-length agreements with our Business Manager, our Real Estate Manager or any other affiliates of IREIC.
The agreements and arrangements with our Business Manager, our Real Estate Manager and any other affiliates of IREIC were not negotiated at arm’s-length. These agreements may contain terms and conditions that are not in our best interest or would not be present if we entered into arm’s-length agreements with third parties.
Our Business Manager, our Real Estate Manager and other affiliates of IREIC face conflicts of interest caused by their compensation arrangements with us, which could result in actions that are not in the long-term best interests of our stockholders.
We pay fees, which may be significant, to our Business Manager, Real Estate Manager and other affiliates of IREIC for services provided to us. Our Business Manager receives fees based on the aggregate book value, including acquired intangibles, of our invested assets and the contract purchase price of our assets. Further, our Real Estate Manager receives fees based on the gross income from properties under management and may also receive leasing and construction management fees. Other parties related to, or affiliated with, our Business Manager or Real Estate Manager may also receive fees or cost reimbursements from us. These compensation arrangements may cause these entities to take or not take certain actions. For example, these arrangements may provide an incentive for our Business Manager to: (1) borrow more money than prudent to increase the amount we can invest; or (2) retain instead of sell assets, even if our stockholders may be better served by a sale or other disposition of the assets. Further, the fact that
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we pay the Business Manager an acquisition fee based on the contract purchase price of an asset may cause our Business Manager to negotiate a higher price for an asset than we otherwise would, or to purchase assets that may not otherwise be in our best interests. Ultimately, the interests of these parties in receiving fees may conflict with the interest of our stockholders in earning income on their investment in our common stock.
We rely on entities affiliated with IREIC to identify real estate assets.
We rely on the real estate professionals employed by IREA and other affiliates of our Sponsor to source potential investments in properties, real estate-related assets and other investments in which we may be interested. Our Sponsor and its affiliates maintain an investment committee (“Investment Committee”) that reviews each potential investment and determines whether an investment is acceptable for acquisition. In determining whether an investment is suitable, the Investment Committee considers investment objectives, portfolio and criteria of all programs currently advised by our Sponsor or its affiliates (collectively referred to as the “Programs”). Other factors considered by the Investment Committee may include cash flow, the effect of the acquisition on portfolio diversification, the estimated income or unrelated business tax effects of the purchase, policies relating to leverage, regulatory restrictions and the capital available for investment. Our Business Manager will not recommend any investments for us unless the investment is approved for consideration in advance by the Investment Committee. Once an investment has been approved for consideration by the Investment Committee, the Programs are advised and provided an opportunity to elect to acquire the investment. If more than one Program is interested in acquiring an investment, then the Program that has had the longest period of time elapse since it was allocated and invested in a contested investment is awarded the investment by the allocation committee. We may not, therefore, be able to acquire properties that we otherwise would be interested in acquiring.
Our properties may compete with the properties owned by other programs sponsored by IREIC or IPCC.
Certain programs sponsored by IREIC or Inland Private Capital Corporation (“IPCC”) own and manage the type of properties that we own or seek to acquire, including in the same geographical areas. Therefore, our properties, especially those located in the same geographical area, may compete for tenants or purchasers with other properties owned and managed by other IREIC- or IPCC-sponsored programs. Persons performing services for our Real Estate Manager may face conflicts of interest when evaluating tenant leasing opportunities for our properties and other properties owned and managed by IREIC- or IPCC-sponsored programs, and these conflicts of interest may have an adverse impact on our ability to attract and retain tenants. In addition, a conflict could arise in connection with the resale of properties in the event that we and another IREIC- or IPCC-sponsored program were to attempt to sell similar properties at the same time, including in particular in the event another IREIC- or IPCC-sponsored program engages in a liquidity event at approximately the same time as us, thus impacting our ability to sell the property or complete a proposed liquidity event.
Risks Related to Our Corporate Structure
Our rights, and the rights of our stockholders, to recover claims against our officers, directors, Business Manager and Real Estate Manager are limited.
Under our charter, no director or officer will be liable to us or to any stockholder for money damages to the extent that Maryland law permits the limitation of the liability of directors and officers of a corporation. We may generally indemnify our directors, officers, employees, Business Manager, Real Estate Manager and their respective affiliates for any losses or liabilities suffered by any of them as long as: (1) the directors have determined in good faith that the course of conduct that caused the loss or liability was in our best interest; (2) these persons or entities were acting on our behalf or performing services for us; (3) the loss or liability was not the result of the negligence or misconduct of the directors (gross negligence or willful misconduct of the independent directors), officers, employees, Business Manager, Real Estate Manager or their respective affiliates; and (4) the indemnity or agreement to hold harmless is recoverable only out of our net assets and not from our stockholders. As a result, we and our stockholders may have more limited rights against our directors, officers and employees, our Business Manager, the Real Estate Manager and their respective affiliates, than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our directors, officers and employees or our Business Manager and the Real Estate Manager and their respective affiliates in some cases.
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Our board of directors may, in the future, adopt certain measures under Maryland law without stockholder approval that may have the effect of making it less likely that a stockholder would receive a “control premium” for his or her shares.
Corporations organized under Maryland law with a class of registered securities and at least three independent directors are permitted to protect themselves from unsolicited proposals or offers to acquire the company by electing to be subject, by a charter or bylaw provision or a board of directors resolution and notwithstanding any contrary charter or bylaw provision, to any or all of five provisions:
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staggering the board of directors into three classes; |
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requiring a two-thirds vote of stockholders to remove directors; |
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providing that only the board can fix the size of the board; |
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providing that all vacancies on the board, regardless of how the vacancy was created, may be filled only by the affirmative vote of a majority of the remaining directors in office and for the remainder of the full term of the class of directors in which the vacancy occurred; and |
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requiring that special stockholders meetings be called only by holders of shares entitled to cast a majority of the votes entitled to be cast at the meeting. |
These provisions may discourage an extraordinary transaction, such as a merger, tender offer or sale of all or substantially all of our assets, all of which might provide a premium price for stockholders’ shares. Our charter does not prohibit our board from opting into any of the above provisions.
Further, under the Maryland Business Combination Act, we may not engage in any merger or other business combination with an “interested stockholder” or any affiliate of that interested stockholder for a period of five years after the most recent date on which the interested stockholder became an interested stockholder. After the five-year period ends, any merger or other business combination with the interested stockholder must be recommended by our board of directors and approved by the affirmative vote of at least:
|
|
• |
80% of all votes entitled to be cast by holders of outstanding shares of our voting stock; and |
|
|
• |
two-thirds of all of the votes entitled to be cast by holders of outstanding shares of our voting stock other than those shares owned or held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder unless, among other things, our stockholders receive a minimum payment for their common stock equal to the highest price paid by the interested stockholder for its common stock. |
Our directors have adopted a resolution exempting any business combination involving us and The Inland Group or any affiliate of The Inland Group, including our Business Manager and Real Estate Manager, from the provisions of this law.
Our charter places limits on the amount of common stock that any person may own without the prior approval of our board of directors.
No more than 50% of the outstanding shares of our common stock may be beneficially owned, directly or indirectly, by five or fewer individuals at any time during the last half of each taxable year (other than the first taxable year for which an election to be a REIT has been made). Our charter prohibits any persons or groups from owning more than 9.8% in value of our outstanding stock or more than 9.8% in value or in number of shares, whichever is more restrictive, of our outstanding common stock without the prior approval of our board of directors. These provisions may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets that might involve a premium price for holders of our common stock. Further, any person or group attempting to purchase shares exceeding these limits could be compelled to sell the additional shares and, as a result, to forfeit the benefits of owning the additional shares.
Maryland law limits, in some cases, the ability of a third party to vote shares acquired in a “control share acquisition.”
The Maryland Control Share Acquisition Act provides that “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved by stockholders by a vote of two-thirds of the votes entitled to be cast on the matter. Shares of stock owned by the acquirer, by officers or by employees who are directors of the corporation, are excluded from shares entitled to vote on the matter. “Control shares” are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer can exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within specified ranges of voting
22
power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition of issued and outstanding control shares. The control share acquisition statute does not apply: (1) to shares acquired in a merger, consolidation or share exchange if the Maryland corporation is a party to the transaction; or (2) to acquisitions approved or exempted by the charter or bylaws of the Maryland corporation. Our bylaws contain a provision exempting from the Control Share Acquisition Act any and all acquisitions of our stock by any person. There can be no assurance that this provision will not be amended or eliminated at any time in the future.
Federal Income Tax Risks
If we fail to remain qualified as a REIT, our operations and distributions to stockholders will be adversely affected.
If we were to fail to remain qualified as a REIT, without the benefit of certain relief provisions, in any taxable year:
|
|
• |
we would not be allowed to deduct distributions paid to stockholders when computing our taxable income; |
|
|
• |
we would be subject to federal and state income tax on our taxable income at regular corporate rates; |
|
|
• |
we would be disqualified from being taxed as a REIT for the four taxable years following the year during which we failed to qualify, unless entitled to relief under certain statutory provisions; |
|
|
• |
we would have less cash to pay distributions to stockholders; and |
|
|
• |
we may be required to borrow additional funds or sell some of our assets in order to pay corporate tax obligations we may incur as a result of being disqualified. |
In addition, if we were to fail to qualify as a REIT, we would not be required to pay distributions to stockholders, and all distributions to stockholders that we did pay would be subject to tax as regular corporate dividends to the extent of our current and accumulated earnings and profits. This means that our U.S. stockholders who are taxed as individuals generally would be taxed on our dividends at long-term capital gains rates and that our corporate stockholders would be entitled to the dividends received deduction with respect to such dividends, subject, in each case, to applicable limitations under the Internal Revenue Code.
The taxation of distributions to our stockholders can be complex; however, distributions that we make to our stockholders generally will be taxable as ordinary income.
Distributions that we make to our taxable stockholders out of current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be taxable as ordinary income. For tax years beginning after December 31, 2017, noncorporate stockholders are entitled to a 20% deduction with respect to these ordinary REIT dividends which would result in a maximum effective federal income tax rate on them of 29.6% (or 33.4% including the 3.8% surtax on net investment income). However, a portion of our distributions may: (1) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that they are attributable to net capital gain recognized by us; (2) be designated by us as qualified dividend income, taxable at capital gains rates, generally to the extent they are attributable to dividends we receive from any taxable REIT subsidiaries or certain other taxable C corporations in which we own shares of stock; or (3) constitute a return of capital generally to the extent that they exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital is generally not taxable, but has the effect of reducing the tax basis of a stockholder’s investment in our common stock. Distributions that exceed our current and accumulated earnings and profits and a stockholder’s tax basis in our common stock generally will be taxable as capital gain.
To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions to make distributions to our stockholders.
To qualify as a REIT, we must distribute to our stockholders each year 90% of our taxable income, subject to certain adjustments and excluding any net capital gain. At times, we may not have sufficient funds to satisfy these distribution requirements and may need to borrow funds to make these distributions and maintain our REIT status and avoid the payment of income and excise taxes. These borrowing needs could result from: (1) differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes; (2) the effect of non-deductible capital expenditures; (3) the creation of reserves; or (4) required debt amortization payments. We may need to borrow funds at times when market conditions are unfavorable. Further, if we are unable to borrow funds when needed for this purpose, we would have to find alternative sources of funding or risk losing our status as a REIT.
23
Certain of our business activities are potentially subject to the prohibited transaction tax.
Our ability to dispose of property during the first two years following acquisition is restricted to a substantial extent as a result of our REIT status. Under applicable provisions of the Internal Revenue Code regarding prohibited transactions by REITs, we will be subject to a 100% tax on any gain realized on the sale or other disposition of any property (other than foreclosure property) we own, directly or through any wholly owned subsidiary (or entity in which we are treated as a partner), excluding our taxable REIT subsidiaries, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of trade or business. Determining whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property. We cannot provide assurance that any particular property we own, directly or through any wholly owned subsidiary (or entity in which we are treated as a partner), excluding our taxable REIT subsidiaries, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business. The Internal Revenue Code sets forth a safe harbor for REITs that wish to sell property without risking the imposition of the 100% tax; however, there is no assurance that we will be able to qualify for the safe harbor. Even if we do not hold property for sale in the ordinary course of a trade or business, there is no assurance that our position will not be challenged by the Internal Revenue Service, especially if we make frequent sales or sales of property in which we have short holding periods.
Certain fees paid to us may affect our REIT status.
Income received in the nature of rental subsidies or rent guarantees, in some cases, may not qualify as rental income from real estate and could be characterized by the Internal Revenue Service as non-qualifying income for purposes of satisfying the 75% and 95% gross income tests required for REIT qualification. If the aggregate of non-qualifying income under the 95% gross income test in any taxable year ever exceeded 5% of our gross revenues for the taxable year or non-qualifying income under the 75% gross income test in any taxable year ever exceeded 25% of our gross revenues for the taxable year, we could lose our REIT status for that taxable year and the four taxable years following the year of losing our REIT status.
Complying with the REIT requirements may force us to liquidate otherwise attractive investments.
To qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, certain government securities and qualified real estate assets, including shares of stock in other REITs, certain mortgage loans and mortgage-backed securities. The remainder of our investment in securities (other than qualified government securities, qualified real estate assets and taxable REIT subsidiaries) generally may not include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than qualified government securities, qualified real estate assets and taxable REIT subsidiaries) may consist of the securities of any one issuer, no more than 25% of the value of our total assets may be securities excluding government securities, stock issued by our qualified REIT subsidiaries and other securities that qualify as real estate assets and no more than 20% of the value of our total assets may consist of stock or securities of one or more taxable REIT subsidiaries. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance.
If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within thirty days after the end of the calendar quarter, or otherwise qualify to cure the failure under a relief provision, to avoid losing our REIT status and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments.
Our ability to dispose of some of our properties may be constrained by their tax attributes.
Our ability to dispose of some of our properties is constrained by their tax attributes. Properties which we own for a significant period of time often have low tax bases. If we dispose of low-basis properties outright in taxable transactions, we may recognize a significant amount of taxable gain that we must distribute to our stockholders in order to avoid tax, and potentially, if the gain does not qualify as a net capital gain, in order to meet the minimum distribution requirements of the Internal Revenue Code for REITs, which in turn would impact our cash flow. To dispose of low basis properties efficiently we may use like-kind exchanges, which qualify for non-recognition of taxable gain, but can be difficult to consummate and result in the property for which the disposed assets are exchanged inheriting their low tax bases and other tax attributes (including tax protection covenants).
Our stockholders may have tax liability on distributions that they elect to reinvest in our common stock.
If our stockholders participate in our DRP, they will be deemed to have received, and for income tax purposes will be taxed on, the fair market value of the share of our common stock that they receive in lieu of cash distributions. As a result, unless a stockholder is a tax-exempt entity, it will have to use funds from other sources to pay its tax liability.
24
In certain circumstances, we may be subject to federal and state income taxes as a REIT, which would reduce our cash available to pay distributions.
Even if we maintain our status as a REIT, we may become subject to federal income taxes and related state taxes. For example, if we have net income from a “prohibited transaction,” we will incur taxes equal to the full amount of the net income from the prohibited transaction. We may not be able to make sufficient distributions to avoid excise taxes applicable to REITs. We also may decide to retain income we earn from the sale or other disposition of our property and pay income tax directly on this income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have to file income tax returns to receive a refund of the income tax paid on their behalf. We also may be subject to state and local taxes on our income, property or net worth, either directly or at the level of the other companies through which we indirectly own our assets. Any federal or state taxes paid by us will reduce our cash available to pay distributions.
Complying with REIT requirements may limit our ability to hedge effectively.
The REIT provisions of the Internal Revenue Code may limit our ability to hedge the risks inherent to our operations. Under current law, any income that we generate from derivatives or other transactions intended to hedge risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made, or to be made, to acquire or carry real estate assets or in certain cases to hedge previously acquired hedges entered into to manage risks associated with property that has been disposed of or liabilities that have been extinguished, if properly identified under applicable Treasury Regulations, generally will not constitute gross income for purposes of the 75% and 95% income requirements applicable to REITs. However, we may be required to limit the use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.
Legislative or regulatory action could adversely affect investors.
Changes to the tax laws are likely to occur, and these changes may adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets. Our stockholders are urged to consult with their own tax advisors with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares.
Future legislation might result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be taxed, for federal income tax purposes, as a corporation. As a result, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a corporation, without the vote of our stockholders. Our board of directors has fiduciary duties to us and our stockholders and could only cause changes in our tax treatment if it determines in good faith that such changes are in the best interest of our stockholders.
None.
(Dollar amounts in thousands, except per square foot amounts)
The table below presents a summary of our investment properties as of December 31, 2017 and 2016.
|
|
|
As of December 31, 2017 |
|
|
As of December 31, 2016 |
|
||
|
Number of properties |
|
|
59 |
|
|
|
56 |
|
|
Purchase price |
|
$ |
1,412,841 |
|
|
$ |
1,337,827 |
|
|
Total square footage |
|
|
6,860,923 |
|
|
|
6,345,578 |
|
|
Weighted average physical occupancy |
|
|
93.9 |
% |
|
|
93.6 |
% |
|
Weighted average economic occupancy |
|
|
94.8 |
% |
|
|
94.6 |
% |
|
Weighted average remaining lease term (years) |
|
6.4 |
|
|
6.8 |
|
||
As of December 31, 2017 and 2016, ABR per square foot averaged $17.16 and $17.25, respectively, for all properties owned. ABR is calculated by annualizing the current, in-place monthly base rent for leases, including any tenant concessions, such as rent abatement or allowances, which may have been granted and excluding ground leases. ABR including ground leases averaged $14.81 and $15.13, as of December 31, 2017 and 2016, respectively.
25
The table below presents information for each of our investment properties as of December 31, 2017.
|
Property |
|
Location |
|
Square Footage |
|
|
Physical Occupancy |
|
|
Economic Occupancy |
|
|
Mortgage Balance |
|
|
Interest Rate (b) |
|
|||||
|
Dollar General (12 properties) |
|
Various |
|
|
111,890 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
$ |
7,447 |
|
|
|
4.33 |
% |
|
Newington Fair (a) |
|
Newington, CT |
|
|
186,205 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Wedgewood Commons |
|
Olive Branch, MS |
|
|
159,258 |
|
|
|
98.1 |
% |
|
|
98.1 |
% |
|
|
15,260 |
|
|
|
3.37 |
% |
|
Park Avenue |
|
Little Rock, AR |
|
|
79,131 |
|
|
|
66.7 |
% |
|
|
100.0 |
% |
|
|
14,062 |
|
|
|
3.77 |
% |
|
North Hills Square |
|
Coral Springs, FL |
|
|
63,829 |
|
|
|
98.1 |
% |
|
|
98.1 |
% |
|
|
5,525 |
|
|
|
4.02 |
% |
|
Mansfield Shopping Center |
|
Mansfield, TX |
|
|
148,529 |
|
|
|
71.0 |
% |
|
|
71.0 |
% |
|
|
14,200 |
|
|
|
3.90 |
% |
|
Lakeside Crossing |
|
Lynchburg, VA |
|
|
67,034 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
9,910 |
|
|
|
3.87 |
% |
|
MidTowne Shopping Center |
|
Little Rock, AR |
|
|
126,288 |
|
|
|
88.6 |
% |
|
|
88.6 |
% |
|
|
20,725 |
|
|
|
4.06 |
% |
|
Dogwood Festival |
|
Flowood, MS |
|
|
187,610 |
|
|
|
91.0 |
% |
|
|
91.0 |
% |
|
|
24,352 |
|
|
|
3.60 |
% |
|
Pick N Save Center |
|
West Bend, WI |
|
|
86,900 |
|
|
|
90.5 |
% |
|
|
90.5 |
% |
|
|
9,561 |
|
|
|
3.54 |
% |
|
Harris Plaza (a) |
|
Layton, UT |
|
|
123,890 |
|
|
|
81.6 |
% |
|
|
81.6 |
% |
|
|
— |
|
|
|
— |
|
|
Dixie Valley |
|
Louisville, KY |
|
|
119,981 |
|
|
|
92.4 |
% |
|
|
92.4 |
% |
|
|
6,798 |
|
|
|
3.55 |
% |
|
The Landings at Ocean Isle (a) |
|
Ocean Isle, NC |
|
|
53,203 |
|
|
|
92.2 |
% |
|
|
92.2 |
% |
|
|
— |
|
|
|
— |
|
|
Shoppes at Prairie Ridge |
|
Pleasant Prairie, WI |
|
|
232,606 |
|
|
|
96.0 |
% |
|
|
96.7 |
% |
|
|
15,591 |
|
|
|
3.28 |
% |
|
Harvest Square |
|
Harvest, AL |
|
|
70,590 |
|
|
|
91.2 |
% |
|
|
91.2 |
% |
|
|
6,706 |
|
|
|
4.65 |
% |
|
Heritage Square |
|
Conyers, GA |
|
|
22,385 |
|
|
|
93.4 |
% |
|
|
93.4 |
% |
|
|
4,460 |
|
|
|
5.10 |
% |
|
The Shoppes at Branson Hills |
|
Branson, MO |
|
|
256,329 |
|
|
|
91.8 |
% |
|
|
91.8 |
% |
|
|
20,240 |
|
|
|
3.18 |
% |
|
Branson Hills Plaza |
|
Branson, MO |
|
|
210,201 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Copps Grocery Store (a) |
|
Stevens Point, WI |
|
|
69,911 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Fox Point Plaza |
|
Neenah, WI |
|
|
171,121 |
|
|
|
98.1 |
% |
|
|
98.1 |
% |
|
|
10,836 |
|
|
|
2.92 |
% |
|
Shoppes at Lake Park (a) |
|
West Valley City, UT |
|
|
52,997 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Plaza at Prairie Ridge (a) |
|
Pleasant Prairie, WI |
|
|
9,035 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Green Tree Shopping Center |
|
Katy, TX |
|
|
147,621 |
|
|
|
97.5 |
% |
|
|
97.5 |
% |
|
|
13,100 |
|
|
|
3.24 |
% |
|
Eastside Junction |
|
Athens, AL |
|
|
79,700 |
|
|
|
85.7 |
% |
|
|
85.7 |
% |
|
|
6,223 |
|
|
|
4.60 |
% |
|
Fairgrounds Crossing |
|
Hot Springs, AR |
|
|
155,127 |
|
|
|
98.5 |
% |
|
|
98.5 |
% |
|
|
13,453 |
|
|
|
5.21 |
% |
|
Prattville Town Center |
|
Prattville, AL |
|
|
168,842 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
15,930 |
|
|
|
5.48 |
% |
|
Regal Court |
|
Shreveport, LA |
|
|
363,061 |
|
|
|
93.2 |
% |
|
|
93.2 |
% |
|
|
26,000 |
|
|
|
4.50 |
% |
|
Shops at Hawk Ridge (a) |
|
St. Louis, MO |
|
|
75,951 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Walgreens Plaza |
|
Jacksonville, NC |
|
|
42,219 |
|
|
|
64.9 |
% |
|
|
64.9 |
% |
|
|
4,650 |
|
|
|
5.30 |
% |
|
Whispering Ridge (a) |
|
Omaha, NE |
|
|
69,676 |
|
|
|
39.8 |
% |
|
|
39.8 |
% |
|
|
— |
|
|
|
— |
|
|
Frisco Marketplace (a) |
|
Frisco, TX |
|
|
112,024 |
|
|
|
94.0 |
% |
|
|
94.0 |
% |
|
|
— |
|
|
|
— |
|
|
White City |
|
Shrewsbury, MA |
|
|
257,121 |
|
|
|
95.8 |
% |
|
|
97.1 |
% |
|
|
49,400 |
|
|
|
3.24 |
% |
|
Treasure Valley (a) |
|
Nampa, ID |
|
|
133,292 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Yorkville Marketplace (a) |
|
Yorkville, IL |
|
|
111,591 |
|
|
|
75.2 |
% |
|
|
91.3 |
% |
|
|
— |
|
|
|
— |
|
|
Shoppes at Market Pointe |
|
Papillion, NE |
|
|
253,903 |
|
|
|
98.2 |
% |
|
|
98.2 |
% |
|
|
13,700 |
|
|
|
3.30 |
% |
|
2727 Iowa Street (a) |
|
Lawrence, KS |
|
|
85,044 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Settlers Ridge |
|
Pittsburgh, PA |
|
|
473,821 |
|
|
|
99.1 |
% |
|
|
99.1 |
% |
|
|
76,532 |
|
|
|
3.70 |
% |
|
Milford Marketplace |
|
Milford, CT |
|
|
111,720 |
|
|
|
98.6 |
% |
|
|
98.6 |
% |
|
|
18,727 |
|
|
|
4.02 |
% |
|
Marketplace at El Paseo |
|
Fresno, CA |
|
|
224,683 |
|
|
|
95.8 |
% |
|
|
96.6 |
% |
|
|
38,000 |
|
|
|
2.95 |
% |
|
Blossom Valley Plaza (a) |
|
Turlock, CA |
|
|
111,435 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
The Village at Burlington Creek |
|
Kansas City, MO |
|
|
158,023 |
|
|
|
83.3 |
% |
|
|
83.3 |
% |
|
|
17,723 |
|
|
|
4.25 |
% |
|
Oquirrh Mountain Marketplace (a) |
|
South Jordan, UT |
|
|
75,950 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Marketplace at Tech Center |
|
Newport News, VA |
|
|
210,297 |
|
|
|
95.4 |
% |
|
|
99.3 |
% |
|
|
47,550 |
|
|
|
3.15 |
% |
|
Coastal North Town Center |
|
Myrtle Beach, SC |
|
|
304,662 |
|
|
|
95.1 |
% |
|
|
95.1 |
% |
|
|
43,680 |
|
|
|
3.17 |
% |
|
Oquirrh Mountain Marketplace II (a) |
|
South Jordan, UT |
|
|
10,150 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Wilson Marketplace |
|
Wilson, NC |
|
|
311,030 |
|
|
|
96.8 |
% |
|
|
97.6 |
% |
|
|
24,480 |
|
|
|
4.06 |
% |
|
Pentucket Shopping Center |
|
Plaistow, NH |
|
|
198,469 |
|
|
|
98.0 |
% |
|
|
98.0 |
% |
|
|
14,700 |
|
|
|
3.65 |
% |
|
Coastal North Town Center II |
|
Myrtle Beach, SC |
|
|
6,588 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
— |
|
|
|
— |
|
|
Portfolio total |
|
|
|
|
6,860,923 |
|
|
|
93.9 |
% |
|
|
94.8 |
% |
|
$ |
609,521 |
|
|
|
3.69 |
% |
26
|
(a) |
Property is pledged as collateral under our Credit Facility. |
|
(b) |
Portfolio total is equal to the weighted average interest rate. |
Tenancy Highlights
The following table presents information regarding the top ten tenants in our portfolio based on annualized base rent for leases in-place as of December 31, 2017.
|
Tenant Name |
|
Number of Leases |
|
|
Annualized Base Rent |
|
|
Percent of Total Portfolio Annualized Base Rent |
|
|
Annualized Base Rent Per Square Foot |
|
|
Square Footage |
|
|
Percent of Total Portfolio Square Footage |
|
||||||
|
Dicks Sporting Goods, Inc |
|
|
6 |
|
|
$ |
3,511 |
|
|
|
3.7 |
% |
|
$ |
12.72 |
|
|
|
276,038 |
|
|
|
4.0 |
% |
|
The Kroger Co |
|
|
4 |
|
|
|
3,307 |
|
|
|
3.4 |
% |
|
|
13.25 |
|
|
|
249,493 |
|
|
|
3.6 |
% |
|
TJ Maxx/HomeGoods/Marshalls |
|
|
13 |
|
|
|
3,170 |
|
|
|
3.3 |
% |
|
|
9.63 |
|
|
|
329,253 |
|
|
|
4.8 |
% |
|
Petsmart |
|
|
10 |
|
|
|
2,583 |
|
|
|
2.7 |
% |
|
|
13.31 |
|
|
|
194,077 |
|
|
|
2.8 |
% |
|
Ross Dress for Less, Inc |
|
|
9 |
|
|
|
2,379 |
|
|
|
2.5 |
% |
|
|
10.03 |
|
|
|
237,165 |
|
|
|
3.5 |
% |
|
Albertsons/Jewel/Shaws |
|
|
2 |
|
|
|
2,235 |
|
|
|
2.3 |
% |
|
|
17.48 |
|
|
|
127,892 |
|
|
|
1.9 |
% |
|
Ulta Salon, Cosmetics & Fragrance |
|
|
10 |
|
|
|
2,217 |
|
|
|
2.3 |
% |
|
|
21.26 |
|
|
|
104,276 |
|
|
|
1.5 |
% |
|
Kohl's Department Stores |
|
|
4 |
|
|
|
1,888 |
|
|
|
2.0 |
% |
|
|
5.68 |
|
|
|
332,461 |
|
|
|
4.8 |
% |
|
LA Fitness (Fitness International) |
|
|
2 |
|
|
|
1,810 |
|
|
|
1.9 |
% |
|
|
20.20 |
|
|
|
89,600 |
|
|
|
1.3 |
% |
|
Giant Eagle |
|
|
1 |
|
|
|
1,805 |
|
|
|
1.9 |
% |
|
|
13.96 |
|
|
|
129,340 |
|
|
|
1.9 |
% |
|
Top ten tenants |
|
|
61 |
|
|
$ |
24,905 |
|
|
|
26.0 |
% |
|
$ |
12.03 |
|
|
|
2,069,595 |
|
|
|
30.1 |
% |
The following table sets forth a summary of our tenant diversity for our entire portfolio and is based on leases in-place at December 31, 2017.
|
Tenant Type |
|
Gross Leasable Area – Square Footage |
|
|
Percent of Total Gross Leasable Area |
|
|
Percent of Total Annualized Base Rent |
|
|||
|
Discount and Department Stores |
|
|
1,535,229 |
|
|
|
23.6 |
% |
|
|
12.0 |
% |
|
Home Goods |
|
|
1,016,961 |
|
|
|
15.7 |
% |
|
|
9.7 |
% |
|
Grocery |
|
|
950,042 |
|
|
|
14.6 |
% |
|
|
13.9 |
% |
|
Lifestyle, Health Clubs, Books & Phones |
|
|
778,762 |
|
|
|
12.0 |
% |
|
|
14.8 |
% |
|
Restaurant |
|
|
543,098 |
|
|
|
8.4 |
% |
|
|
15.8 |
% |
|
Apparel & Accessories |
|
|
472,346 |
|
|
|
7.3 |
% |
|
|
10.7 |
% |
|
Sporting Goods |
|
|
333,719 |
|
|
|
5.1 |
% |
|
|
4.9 |
% |
|
Pet Supplies |
|
|
287,633 |
|
|
|
4.4 |
% |
|
|
4.3 |
% |
|
Consumer Services, Salons, Cleaners, Banks |
|
|
273,663 |
|
|
|
4.2 |
% |
|
|
7.3 |
% |
|
Health, Doctors & Health Foods |
|
|
154,126 |
|
|
|
2.4 |
% |
|
|
4.4 |
% |
|
Other |
|
|
147,393 |
|
|
|
2.3 |
% |
|
|
2.2 |
% |
|
Total |
|
|
6,492,972 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
The following table sets forth a summary, as of December 31, 2017, of the percent of total annualized base rent and the weighted average lease expiration by size of tenant.
|
Size of Tenant |
|
Description - Square Footage |
|
Percent of Total Annualized Base Rent |
|
|
Weighted Average Lease Expiration – Years |
|
||
|
Anchor |
|
10,000 and over |
|
|
52 |
% |
|
|
7.7 |
|
|
Junior Box |
|
5,000-9,999 |
|
|
15 |
% |
|
|
5.9 |
|
|
Small Shop |
|
Less than 5,000 |
|
|
33 |
% |
|
|
4.6 |
|
|
Total |
|
|
|
|
100 |
% |
|
|
6.4 |
|
27
Lease Expirations
The following table sets forth a summary, as of December 31, 2017, of lease expirations scheduled to occur during each of the calendar years from 2018 to 2027 and thereafter, assuming no exercise of renewal options or early termination rights for leases commenced on or prior to December 31, 2017. Annualized base rent represents the rent in place for the applicable property at December 31, 2017. The table below includes ground leases. If ground leases are excluded, annualized base rent would equal $86,755, or $17.16 per square foot for total expiring leases.
|
Lease Expiration Year |
|
Number of Expiring Leases |
|
|
Gross Leasable Area of Expiring Leases - Square Footage |
|
|
Percent of Total Gross Leasable Area of Expiring Leases |
|
|
Total Annualized Base Rent of Expiring Leases |
|
|
Percent of Total Annualized Base Rent of Expiring Leases |
|
|
Annualized Base Rent per Leased Square Foot |
|
||||||
|
2018 (including month-to-month) |
|
|
81 |
|
|
|
281,164 |
|
|
|
4.3 |
% |
|
$ |
5,195 |
|
|
|
5.4 |
% |
|
$ |
18.48 |
|
|
2019 |
|
|
81 |
|
|
|
475,753 |
|
|
|
7.3 |
% |
|
|
7,217 |
|
|
|
7.5 |
% |
|
|
15.17 |
|
|
2020 |
|
|
96 |
|
|
|
522,947 |
|
|
|
8.1 |
% |
|
|
8,512 |
|
|
|
8.9 |
% |
|
|
16.28 |
|
|
2021 |
|
|
92 |
|
|
|
374,011 |
|
|
|
5.8 |
% |
|
|
7,546 |
|
|
|
7.9 |
% |
|
|
20.18 |
|
|
2022 |
|
|
91 |
|
|
|
572,501 |
|
|
|
8.8 |
% |
|
|
10,845 |
|
|
|
11.3 |
% |
|
|
18.94 |
|
|
2023 |
|
|
69 |
|
|
|
688,974 |
|
|
|
10.6 |
% |
|
|
9,314 |
|
|
|
9.7 |
% |
|
|
13.52 |
|
|
2024 |
|
|
50 |
|
|
|
480,656 |
|
|
|
7.4 |
% |
|
|
9,075 |
|
|
|
9.4 |
% |
|
|
18.88 |
|
|
2025 |
|
|
68 |
|
|
|
601,759 |
|
|
|
9.3 |
% |
|
|
11,288 |
|
|
|
11.7 |
% |
|
|
18.76 |
|
|
2026 |
|
|
38 |
|
|
|
439,754 |
|
|
|
6.8 |
% |
|
|
6,016 |
|
|
|
6.3 |
% |
|
|
13.68 |
|
|
2027 |
|
|
39 |
|
|
|
389,979 |
|
|
|
6.0 |
% |
|
|
4,937 |
|
|
|
5.1 |
% |
|
|
12.66 |
|
|
Thereafter |
|
|
39 |
|
|
|
1,665,474 |
|
|
|
25.6 |
% |
|
|
16,189 |
|
|
|
16.8 |
% |
|
|
9.72 |
|
|
Leased Total |
|
|
744 |
|
|
|
6,492,972 |
|
|
|
100.0 |
% |
|
$ |
96,134 |
|
|
|
100.0 |
% |
|
$ |
14.81 |
|
We are not a party to, and none of our properties are subject to, any material pending legal proceedings.
Not applicable.
28
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Market Information
There is no established public trading market for our shares of common stock. Our board will determine when, and if, to apply to have our shares of common stock listed for trading on a national securities exchange, subject to satisfying existing listing requirements. There is no assurance that we will list our shares. Further, there is no assurance that stockholders will be able to sell their shares at a time or price acceptable to them. We publish an estimated per share value of our common stock to assist broker dealers that sold our common stock in the Offering to comply with the rules published by FINRA. On March 29, 2017, our board established an Estimated Per Share NAV of our common stock as of December 31, 2016 equal to $22.63 per share ($9.05 prior to the Reverse Stock Split).
We engaged CBRE Capital Advisors, Inc., a FINRA registered broker dealer firm that specializes in providing real estate financial services (“CBRE Cap”), to assist our board in establishing an Estimated Per Share NAV as of December 31, 2016. CBRE Cap provided an analysis of our assets and liabilities (including individual property-level analysis), all of which was used to estimate a range of Estimated Per Share NAVs. The engagement of CBRE Cap was based on a number of factors, including CBRE Cap’s expertise in valuation services and its, and its affiliates, breadth and depth of experience in real estate services. CBRE Cap engaged CBRE Valuation & Advisory Services, an affiliate of CBRE Cap that conducts appraisals and valuations of real properties (the “MAI Appraisals”), to perform cash flow projections and unlevered, ten-year discounted cash flow analyses from restricted-use appraisals for each of our wholly-owned operating assets as of December 31, 2016 (the “Valuation Date”). Based, in part, on the MAI Appraisals, CBRE Cap developed a valuation analysis of our assets and liabilities and provided that analysis to our board in a report dated March 29, 2017 that contained, among other information, a range of per share net asset values for our common stock as of the Valuation Date (the “Valuation Report”). There were no changes between December 31, 2016 and the date of the Valuation Report that our Business Manager believes would have materially impacted the overall Estimated Per Share NAV. We are not affiliated with CBRE, CBRE Cap or any of their affiliates. While we and affiliates or related parties of our Business Manager have engaged and may engage CBRE Cap or its affiliates in the future for valuations and commercial real estate-related services of various kinds, we believe that there are no material conflicts of interest with respect to our engagement of CBRE Cap.
To estimate our per share value, CBRE Cap utilized the “net asset value” or “NAV” method, also known as the appraised value methodology, which is based on the fair value of real estate, real estate related investments and all other assets, less the fair value of total liabilities. The fair value estimate of our real estate assets is equal to the sum of their individual real estate values. Generally, CBRE Cap estimated the value of our real estate assets using several methodologies, including a discounted cash flow, or “DCF,” of projected net operating income, less capital expenditures, for each property, for the ten-year period ending December 31, 2026, and applied a discount rate which it believed was consistent with the inherent level of risk associated with the asset. The other methodologies considered consisted of the “direct cap rate” and “sales comparison” approaches. CBRE Cap believed use of the DCF approach was more appropriate because of the large percentage of multi-tenant assets owned by us. For all other assets, including cash and other current assets, fair value was determined separately based on book value. CBRE Valuation & Advisory Services estimated the fair value of our debt by comparing current market interest rates to the contract rates on our long-term debt and discounting to present value the difference in future payments. The fair market value of our debt was reviewed by CBRE Cap for reasonableness and utilized in the Valuation Report. CBRE Cap determined NAV in a manner consistent with the definition of fair value under U.S. GAAP set forth in FASB’s Topic ASC 820, Fair Value Measurements and Disclosures.
Net asset value per share was estimated by subtracting the fair value of our total liabilities from the fair value of our total assets and dividing the result by the number of common shares outstanding on a fully diluted basis as of the Valuation Date. CBRE Cap then applied a discount rate and terminal capitalization rate sensitivity analysis on the weighted average discount and terminal capitalization rates used to value all wholly-owned real estate assets, resulting in a value range equal to $21.55 to $23.70 per share. The mid-point in that range was $22.63. A valuation range was calculated by varying the discount rates and terminal capitalization rates by 2.5% in either direction, which represents a 5% sensitivity on the discount rate and terminal capitalization rate ranges. Terminal capitalization rates were sourced from the MAI Appraisals and varied by location, asset quality and supply and demand metrics. The estimated value of our real estate assets reflects an overall increase of 4.2% compared to our original cost of the real estate assets plus any capital expenditures invested by us.
29
The terminal capitalization rate and discount rate have a significant impact on the estimated value under the net asset value method. The following chart presents the impact of changes to our share price based on variations in the terminal capitalization and discount rates within the range of values determined by CBRE Cap.
|
|
|
Range of Value and Rate |
|
|||||||||
|
|
|
Low |
|
|
Midpoint |
|
|
High |
|
|||
|
Share price |
|
$ |
21.55 |
|
|
$ |
22.63 |
|
|
$ |
23.70 |
|
|
Terminal capitalization rate |
|
|
6.97 |
% |
|
|
6.80 |
% |
|
|
6.63 |
% |
|
Discount rate |
|
|
7.80 |
% |
|
|
7.61 |
% |
|
|
7.41 |
% |
The following table summarizes the individual components presented to our board to estimate per share values as of the dates presented:
|
|
|
Per Share as of December 31, 2016 |
|
|
Per Share as of December 31, 2015 |
|
||
|
Real estate assets |
|
$ |
39.75 |
|
|
$ |
38.28 |
|
|
Cash and other assets, net of other liabilities (1) |
|
|
(0.24 |
) |
|
|
1.30 |
|
|
Fair value of debt (2) |
|
|
(16.88 |
) |
|
|
(17.03 |
) |
|
Estimated Per Share NAV (midpoint) |
|
$ |
22.63 |
|
|
$ |
22.55 |
|
|
(1) |
Includes the following line items from our audited financial statements as of December 31, 2016: (i) cash and cash equivalents; (ii) accounts and rent receivables; (iii) other assets; (iv) accounts payable and accrued expenses; (v) distributions payable; (vi) due to related parties and (vii) other liabilities. Includes present value of unpaid earnout liabilities of ($0.30) and ($0.48) as of December 31, 2016 and 2015, respectively. |
|
(2) |
Includes mortgage loans and credit facility payable plus the fair market value of debt. |
The main factors that impacted our Estimated Per Share NAV as compared to our prior NAV determination as of December 31, 2015 are (i) an increase in the property cash flows utilized in the discounted cash flow analysis and (ii) an increase in the fair market value of debt due to higher interest rates.
Our board reviewed the Valuation Report, met with representatives from CBRE Cap in person and considered the material assumptions and valuation methodologies applied and described therein. On March 29, 2017, our board unanimously adopted $22.63 as our Estimated Per Share NAV. The Valuation Report contained a range for our Estimated Per Share NAV of $21.55 to $23.70. Taking into consideration the reasonableness of the valuation methodologies, assumptions, and the conclusions contained in the Valuation Report, our board determined our estimated net asset value to be approximately $797.8 million, or $22.63 per share, based on a share count of approximately 35.3 million shares issued and outstanding as of the Valuation Date. The Estimated Per Share NAV is the mid-point of the range of values provided by CBRE Cap.
Our board’s determination of the Estimated Per Share NAV was undertaken in accordance with our valuation policy and the recommendations and methodologies of the Investment Program Association, a trade association for non-listed direct investment vehicles (“IPA”), as set forth in IPA Practice Guideline 2013-01 “Valuations of Publicly Registered Non-Listed REITs” (the “IPA Practice Guideline”). In accordance with the valuation policy and the IPA Practice Guideline, the Estimated Per Share NAV excludes any value adjustments due to the size and diversification of our portfolio of assets.
In performing its analyses, CBRE Cap made numerous assumptions as of various points in time with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are necessarily subject to change and beyond the control of CBRE Cap and us. The analyses performed by CBRE Cap are not necessarily indicative of actual values, trading values or actual future results of our common stock that might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. The analyses do not purport to be appraisals or to reflect the prices at which the properties may actually be sold, and such estimates are inherently subject to uncertainty. The actual value of our common stock may vary significantly depending on numerous factors that generally impact the price of securities, our financial condition and the state of the real estate industry more generally. Accordingly, with respect to the Estimated Per Share NAV, neither we nor CBRE Cap can give any assurance that:
|
|
• |
a stockholder would be able to resell his or her shares at the Estimated Per Share NAV; |
|
|
• |
a stockholder would ultimately realize distributions per share equal to the Estimated Per Share NAV upon liquidation of our assets and settlement of our liabilities or a sale of us; |
30
|
|
• |
our shares would trade at a price equal to or greater than the Estimated Per Share NAV if we listed them on a national securities exchange; |
|
|
• |
a third party would acquire us at a value equal to or greater than the Estimated Per Share NAV; or |
|
|
• |
the methodology used to estimate the Estimated Per Share NAV would be acceptable to FINRA or under ERISA for compliance with its reporting requirements. |
The Estimated Per Share NAV represents a snapshot in time, will likely change, and does not necessarily represent the amount a stockholder would receive now or in the future for his or her shares of our common stock. Stockholders should not rely on the Estimated Per Share NAV in making a decision to buy or sell shares of our common stock. The Estimated Per Share NAV is based on a number of assumptions, estimates and data that are inherently imprecise and susceptible to uncertainty and changes in circumstances, including changes to the value of individual assets as well as changes and developments in the real estate and capital markets, changes in interest rates, and changes in the composition of our portfolio.
We continue to engage CBRE Cap to perform appraisals of our properties and report a range of possible net asset values per share for our common stock. We intend to publish an updated estimated value of our shares no later than March 30, 2018.
As of March 8, 2018, we had 16,657 stockholders of record.
Distributions
During the years ended December 31, 2017, 2016 and 2015, we declared distributions, based upon a daily record date, totaling approximately $53.3 million, $52.4 million and $44.9 million, respectively. The distributions declared for 2017 and 2015 were equal to a daily amount of $0.00410959 per share based upon a 365-day period. The distributions declared for 2016 were equal to a daily amount of $0.00409836 per share based upon a 366-day period.
On November 17, 2017, our board approved a change to our distribution policy to transition the payment of cash distributions from a monthly basis to a quarterly basis, effective January 1, 2018. The actual amount and timing of distributions, if any, is determined by our board of directors in its discretion, based on its analysis of our actual and expected cash flow, capital expenditures and investments, as well as general financial conditions.
The following table shows the sources for the payment of distributions to common stockholders for the periods indicated (Dollar amounts in thousands):
|
|
|
Year Ended December 31, 2017 |
|
|
Year Ended December 31, 2016 |
|
||||||||||
|
|
|
|
|
|
|
% of Distributions |
|
|
|
|
|
|
% of Distributions |
|
||
|
Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions paid in cash |
|
$ |
26,246 |
|
|
|
|
|
|
$ |
24,527 |
|
|
|
|
|
|
Distributions reinvested through DRP |
|
|
27,069 |
|
|
|
|
|
|
|
27,831 |
|
|
|
|
|
|
Total distributions |
|
$ |
53,315 |
|
|
|
|
|
|
$ |
52,358 |
|
|
|
|
|
|
Source of distribution coverage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by operating activities |
|
$ |
50,871 |
|
|
|
95 |
% |
|
$ |
36,203 |
|
|
|
69 |
% |
|
Proceeds from Offering and DRP |
|
|
2,444 |
|
|
|
5 |
% |
|
|
16,155 |
|
|
|
31 |
% |
|
Total source of distribution coverage |
|
$ |
53,315 |
|
|
|
100 |
% |
|
$ |
52,358 |
|
|
|
100 |
% |
|
Cash flows provided by operating activities (U.S. GAAP basis) |
|
$ |
50,871 |
|
|
|
|
|
|
$ |
36,203 |
|
|
|
|
|
|
Net loss (in accordance with U.S. GAAP) (1) |
|
$ |
(19,102 |
) |
|
|
|
|
|
$ |
(7,961 |
) |
|
|
|
|
|
(1) |
For the year ended December 31, 2017, net loss includes acquisition costs of $754. For the year ended December 31, 2016, net loss includes a reduction in deferred investment property acquisition obligations of $1,556. |
31
The following table compares cumulative distributions paid to cumulative net loss (in accordance with U.S. GAAP) for the period from August 24, 2011 (date of inception) through December 31, 2017 (Dollar amounts in thousands):
|
|
|
For the Period from August 24, 2011 (Date of Inception) to December 31, 2017 |
|
|
|
Distributions paid: |
|
|
|
|
|
Common stockholders in cash |
|
$ |
78,202 |
|
|
Common stockholders reinvested through DRP |
|
|
81,603 |
|
|
Total distributions paid |
|
$ |
159,805 |
|
|
Reconciliation of net loss: |
|
|
|
|
|
Revenues |
|
$ |
349,071 |
|
|
Acquisition and transaction related expenses |
|
|
(19,640 |
) |
|
Provision for impairment of investment property |
|
|
(8,530 |
) |
|
Depreciation and amortization |
|
|
(164,961 |
) |
|
Other operating expenses |
|
|
(144,796 |
) |
|
Other non-operating expenses |
|
|
(59,685 |
) |
|
Net loss (in accordance with U.S. GAAP) (1) |
|
$ |
(48,541 |
) |
|
Funds from operations (2) |
|
$ |
124,950 |
|
|
Cash flows provided by operating activities |
|
$ |
115,574 |
|
|
|
|
|
|
|
|
(1) |
Net loss, as defined by U.S. GAAP, includes the non-cash impact of depreciation and amortization expense as well as costs incurred relating to acquisitions and related transactions and provision for impairment of investment property. |
|
(2) |
For information related to the calculation of funds from operations, see “Non-U.S. GAAP Financial Measures” in this Item 7. |
Share Repurchase Program
We adopted a share repurchase program effective October 18, 2012 which was subsequently amended effective January 1, 2018 to change the processing of repurchase requests from a monthly to a quarterly basis to align with the move to quarterly distributions. Under the SRP, we are authorized, in our discretion, to purchase shares from stockholders who purchased their shares from us or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested. Under the SRP, we may make “ordinary repurchases,” which are defined as all repurchases other than “exceptional repurchases,” which are defined as repurchases upon the death or qualifying disability of a stockholder, at prices ranging from 92.5% of the “share price,” as defined in the SRP, for stockholders who have owned their shares continuously for at least one year, but less than two years, to 100% of the “share price” for stockholders who have owned their shares continuously for at least four years. In the case of “exceptional repurchases,” we may repurchase shares at a repurchase price equal to 100% of the “share price.”
As used in the SRP, “share price” means: (1) prior to our initial valuation date, the offering price of our shares in the Offering (unless the shares were purchased at a discount from that price, and then that purchase price), reduced by any distributions of net sale proceeds that we designate as constituting a return of capital; and (2) on and after our initial valuation date, the lesser of: (A) the share price determined in (1); or (B) the most recently disclosed estimated value per share.
Subject to funds being available, we limit the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year, as adjusted by the Reverse Stock Split. Funding for the SRP is limited to the proceeds we receive from the DRP during the same period. In the case of exceptional repurchases, the one year holding period does not apply.
32
The SRP will immediately terminate if our shares are listed on any national securities exchange. In addition, our board of directors, in its sole discretion, may amend, suspend (in whole or in part), or terminate our SRP. In the event that we amend, suspend or terminate the SRP, however, we will send stockholders notice of the change at least thirty days prior to the change, and we will disclose the change in a report filed with the SEC on either Form 8-K, Form 10-Q or Form 10-K, as appropriate. Further, our board reserves the right in its sole discretion, at any time, and from time to time to reject any requests for repurchases. The following table summarizes the repurchases of shares under the SRP during the year ended December 31, 2017 (Dollar amounts in thousands except per share amounts):
|
Period |
|
Total Shares Requested to be Repurchased |
|
|
Total Number of Shares Repurchased |
|
|
Average Price Paid per Share |
|
|
Amount of Shares Repurchased |
|
|
Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs |
|
|
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs |
|
||||||
|
January 2017 |
|
|
39,678 |
|
|
|
39,678 |
|
|
$ |
21.72 |
|
|
$ |
861 |
|
|
|
39,678 |
|
|
|
1,723,435 |
|
|
February 2017 |
|
|
22,862 |
|
|
|
22,862 |
|
|
$ |
21.60 |
|
|
|
494 |
|
|
|
22,862 |
|
|
|
1,700,573 |
|
|
March 2017 |
|
|
63,188 |
|
|
|
63,188 |
|
|
$ |
21.88 |
|
|
|
1,382 |
|
|
|
63,188 |
|
|
|
1,637,385 |
|
|
April 2017 |
|
|
51,550 |
|
|
|
51,550 |
|
|
$ |
21.66 |
|
|
|
1,117 |
|
|
|
51,550 |
|
|
|
1,585,835 |
|
|
May 2017 |
|
|
59,200 |
|
|
|
59,200 |
|
|
$ |
21.84 |
|
|
|
1,294 |
|
|
|
59,200 |
|
|
|
1,526,635 |
|
|
June 2017 |
|
|
53,008 |
|
|
|
53,008 |
|
|
$ |
21.76 |
|
|
|
1,153 |
|
|
|
53,008 |
|
|
|
1,473,627 |
|
|
July 2017 |
|
|
105,587 |
|
|
|
105,587 |
|
|
$ |
22.14 |
|
|
|
2,337 |
|
|
|
105,587 |
|
|
|
1,368,040 |
|
|
August 2017 |
|
|
118,970 |
|
|
|
118,970 |
|
|
$ |
21.84 |
|
|
|
2,598 |
|
|
|
118,970 |
|
|
|
1,249,070 |
|
|
September 2017 |
|
|
84,029 |
|
|
|
84,029 |
|
|
$ |
22.01 |
|
|
|
1,850 |
|
|
|
84,029 |
|
|
|
1,165,041 |
|
|
October 2017 |
|
|
176,737 |
|
|
|
176,737 |
|
|
$ |
21.99 |
|
|
|
3,887 |
|
|
|
176,737 |
|
|
|
988,304 |
|
|
November 2017 |
|
|
70,632 |
|
|
|
70,632 |
|
|
$ |
22.12 |
|
|
|
1,562 |
|
|
|
70,632 |
|
|
|
917,672 |
|
|
December 2017 |
|
|
116,257 |
|
|
|
116,257 |
|
|
$ |
21.17 |
|
|
|
2,531 |
|
|
|
116,257 |
|
|
|
801,415 |
|
|
Total |
|
|
961,698 |
|
|
|
961,698 |
|
|
$ |
21.91 |
|
|
$ |
21,066 |
|
|
|
961,698 |
|
|
|
|
|
Securities Authorized for Issuance under Equity Compensation Plans
For information regarding the securities authorized for issuance under our equity compensation plan, reference is made to Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” which is included in this Annual Report on Form 10-K.
Recent Sale of Unregistered Equity Securities
On October 2, 2017, we issued 331 restricted common shares and 110 restricted share units to our independent directors pursuant to our Employee and Director Restricted Share Plan, which become vested in equal installments of 33-1/3% on each of the first three anniversaries of October 2, 2017, subject to certain exceptions. No sales commissions or other consideration was paid in connection with such issuances, which were made without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration set forth in Section 4(a)(2) of the Securities Act as transactions not involving any public offering.
33
The following table shows our selected financial data relating to our consolidated historical financial condition and results of operations. This selected data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. (Dollar amounts in thousands, except per share amounts):
|
|
|
As of December 31, |
|
|||||||||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|||||
|
Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,375,370 |
|
|
$ |
1,357,560 |
|
|
$ |
1,401,368 |
|
|
$ |
569,797 |
|
|
$ |
90,888 |
|
|
Mortgages and credit facility payable, net (a) |
|
$ |
691,465 |
|
|
$ |
606,025 |
|
|
$ |
584,499 |
|
|
$ |
184,344 |
|
|
$ |
32,179 |
|
|
|
|
For the year ended December 31 |
|
|||||||||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
|||||
|
Total income |
|
$ |
129,157 |
|
|
$ |
121,498 |
|
|
$ |
76,542 |
|
|
$ |
18,946 |
|
|
$ |
2,825 |
|
|
Net loss (b) |
|
$ |
(19,102 |
) |
|
$ |
(7,961 |
) |
|
$ |
(13,436 |
) |
|
$ |
(4,356 |
) |
|
$ |
(2,527 |
) |
|
Net loss per common share, basic and diluted (c) |
|
$ |
(0.54 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.53 |
) |
|
$ |
(2.95 |
) |
|
Distributions paid to common stockholders |
|
$ |
53,315 |
|
|
$ |
52,358 |
|
|
$ |
42,537 |
|
|
$ |
10,597 |
|
|
$ |
998 |
|
|
Distributions declared to common stockholders |
|
$ |
53,364 |
|
|
$ |
52,449 |
|
|
$ |
44,908 |
|
|
$ |
12,318 |
|
|
$ |
1,289 |
|
|
Distributions declared per common share (c) |
|
$ |
1.50 |
|
|
$ |
1.50 |
|
|
$ |
1.58 |
|
|
$ |
1.50 |
|
|
$ |
1.50 |
|
|
Cash flows provided by (used in) operating activities |
|
$ |
50,871 |
|
|
$ |
36,203 |
|
|
$ |
27,080 |
|
|
$ |
2,922 |
|
|
$ |
(961 |
) |
|
Cash flows used in investing activities |
|
$ |
(82,226 |
) |
|
$ |
(88,034 |
) |
|
$ |
(740,542 |
) |
|
$ |
(310,485 |
) |
|
$ |
(30,375 |
) |
|
Cash flows provided by (used in) financing activities |
|
$ |
32,398 |
|
|
$ |
(21,151 |
) |
|
$ |
691,434 |
|
|
$ |
386,800 |
|
|
$ |
55,733 |
|
|
Weighted average number of common shares outstanding, basic and diluted |
|
|
35,571,249 |
|
|
|
34,963,827 |
|
|
|
27,737,301 |
|
|
|
8,226,376 |
|
|
|
859,179 |
|
|
(a) |
Includes unamortized mortgage premiums and debt issuance costs. |
|
(b) |
For the year ended December 31, 2017, we recognized an impairment charge related to an investment property of $8.5 million. |
|
(c) |
The net loss per common share, basic and diluted is based upon the weighted average number of common shares outstanding for the period ended. The distributions declared per common share are based upon the weighted average number of common shares outstanding for each period presented. |
34
Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Words such as “may,” “could,” “should,” “expect,” “intend,” “plan,” “goal,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “variables,” “potential,” “continue,” “expand,” “maintain,” “create,” “strategies,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions, are intended to identify forward-looking statements.
These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of our management based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under “Risk Factors” in this Annual Report on Form 10-K and the factors described below:
|
|
• |
Market disruptions may adversely impact many aspects of our operating results and operating condition; |
|
|
• |
To date, we have not generated sufficient cash flow from operations to pay distributions, and, therefore, we have paid distributions from the net proceeds of our Offering and our DRP, and may continue to pay distributions from other sources including the proceeds of our DRP, which reduces the amount of cash we ultimately have to invest in assets, negatively impacting the value of our stockholders’ investment and is dilutive to our stockholders; |
|
|
• |
We have incurred net losses on a U.S. GAAP basis for the years ended December 31, 2017, 2016 and 2015; |
|
|
• |
There is no established public trading market for our shares, our stockholders may not be able to sell their shares under our SRP and, if our stockholders are able to sell their shares under the SRP, or otherwise, they may not be able to recover the amount of their investment in our shares; |
|
|
• |
Our charter generally limits the total amount we may borrow to 300% of our net assets, equivalent to 75% of the costs of our assets; |
|
|
• |
Our Sponsor may face a conflict of interest in allocating personnel and resources between its affiliates, our Business Manager and our Real Estate Manager; |
|
|
• |
We do not have arm’s-length agreements with our Business Manager, our Real Estate Manager or any other affiliates of our Sponsor; |
|
|
• |
We pay fees, which may be significant, to our Business Manager, Real Estate Manager and other affiliates of our Sponsor; |
|
|
• |
Our Business Manager and its affiliates face conflicts of interest caused by their compensation arrangements with us, which could result in actions that are not in the long-term best interests of our stockholders; |
|
|
• |
Our properties may compete with the properties owned by other programs sponsored by our Sponsor or IPCC for, among other things, tenants; |
|
|
• |
Our Business Manager is under no obligation, and may not agree, to continue to forgo or defer its business management fee or any acquisition fee; and |
|
|
• |
If we fail to continue to qualify as a REIT, our operations and distributions to stockholders will be adversely affected. |
Forward-looking statements in this Annual Report on Form 10-K reflect our management’s view only as of the date of this Report, and may ultimately prove to be incorrect or false. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.
The following discussion and analysis is based on the consolidated financial statements for the years ended December 31, 2017, 2016 and 2015. Our stockholders should read the following discussion and analysis along with our accompanying consolidated financial statements and the related notes thereto.
35
Overview
We were formed as a Maryland corporation on August 24, 2011 and elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code, commencing with the year ended December 31, 2013. We are managed by our business manager, IREIT Business Manager & Advisor, Inc.
We have primarily focused on acquiring retail properties. We have invested in joint ventures and may continue to invest in additional joint ventures or acquire other real estate assets such as office and medical office buildings, multi-family properties and industrial/distribution and warehouse facilities if management believes the expected returns from those investments exceed that of retail properties. We also may invest in real estate-related equity securities of both publicly traded and private real estate companies, as well as commercial mortgage-backed securities.
At December 31, 2017, we had total assets of approximately $1.4 billion and owned 59 properties located in 24 states containing approximately 6.9 million square feet. A majority of our properties are multi-tenant, necessity-based retail shopping centers primarily located in major regional markets and growing secondary markets throughout the United States. The portfolio properties have staggered lease maturity dates and anchor tenants generally with strong credit ratings.
On January 16, 2018, we effected a 1-for-2.5 Reverse Stock Split whereby every 2.5 shares of our issued and outstanding common stock were converted into one share of our common stock. As a result of the Reverse Stock Split, the number of our outstanding shares was reduced from approximately 88,746,109 to approximately 35,498,444. In accordance with U.S. GAAP, all share information presented has been retroactively adjusted to reflect the Reverse Stock Split.
We commenced our Offering on October 18, 2012, which concluded on October 16, 2015. We sold 33,534,022 shares of common stock generating gross proceeds of $834.4 million from the Offering. On March 29, 2017, our board of directors determined an Estimated Per Share NAV of our common stock of $22.63 ($9.05 prior to the Reverse Stock Split). The previously estimated per share net asset value of $22.55 ($9.02 prior to the Reverse Stock Split) was established on April 7, 2016. We intend to publish an Updated Estimated Per Share NAV no later than March 30, 2018.
Our board of directors approved a change to our distribution policy to transition the payment of cash distributions from a monthly basis to a quarterly basis, effective January 1, 2018. Management anticipates this amended policy will result in reducing transactional costs related to the administration of distributions. We intend to continue to comply with the REIT distribution requirements and distribute no less than 90% of our taxable income. Stockholders who have elected to participate in our DRP will continue to have their cash distributions reinvested to purchase additional shares of our common stock but on a quarterly basis beginning with the first quarter 2018 distribution declared. Our board of directors adopted an amended and restated share repurchase program, effective January 1, 2018, which changes the processing of repurchase requests from a monthly to a quarterly basis to align with the move to quarterly distributions.
We intend to engage an investment bank to assist us in exploring and evaluating potential strategies to better position us for future growth and enhanced stockholder value. We have not set a definitive timetable for completion of our evaluation, and there can be no assurances that this process will result in any change in strategy or any specific transaction being announced or completed.
36
Company Highlights - Year Ended December 31, 2017
Acquisitions
We acquired 3 investment properties in 2017 totaling approximately 0.5 million square feet for approximately $68.6 million (Wilson Marketplace, Pentucket Shopping Center and Coastal North Town Center-Phase II).
Mainstreet JV
In 2017, we entered into, through a wholly owned taxable REIT subsidiary, a joint venture agreement with a third party developer and its affiliates to develop three transitional care/rapid recovery centers in Texas which will be licensed skilled nursing facilities. Our aggregate equity commitment is approximately $8.5 million, excluding costs and legal fees incurred in connection with this investment. As of December 31, 2017, we have funded approximately $7.1 million of this commitment with cash on hand and proceeds from our Credit Facility.
In conjunction with this equity investment, we also agreed to provide subsidiaries of the joint venture mezzanine loans, in the aggregate amount of approximately $5.4 million. The loan term is for 48 months. We will earn interest at a rate of 14.5% per annum and will receive monthly interest payments based on a 10% pay rate. The remaining unpaid interest will be due at maturity or upon certain defined events. The loan is guaranteed by one of the other members of the joint venture. The borrowers may draw on the mezzanine loans from time to time in connection with the construction of the rapid recovery centers and are not expected to draw on the mezzanine loans until such time as we have fully funded our equity commitment to the joint venture. At December 31, 2017, we have not funded any mezzanine loans.
Financings
We borrowed $39.2 million secured by mortgages on five properties in 2017. These borrowings bear interest at a weighted average interest rate of 3.91% per annum and have a weighted average maturity of 5.0 years.
Outlook
The retail industry is changing, and changing quickly. If you only focused on the headlines in 2017, it appeared to be all bad news for retail, with numerous store closings and highly visible bankruptcies. While some forms of retail real estate may become obsolete or less effective in certain markets, the reasons for failed or failing retailers may be less about the retail industry and more about retailers whose strategy has not kept pace with the changing preferences of consumers. Large retailers, such as TJX Companies, Ross Stores and Ulta Beauty have shown exciting growth, opening 260, 96 and 86 new stores, respectively, in 2017. Smaller retailers are expanding rapidly, as well. For each retailer closing a store, 2.7 retailers opened a store in 2017, according to IHL Group’s Debunking the Retail Apocalypse report. Despite this evolving retail landscape, grocery-anchored retail real estate, which is the primary focus of our company, has had solid relative performance. Yet, the 2016 bankruptcy of retailer Sports Authority, which significantly impacted three of our properties, illustrates that no retail real estate portfolio is entirely insulated from the changing retail industry. Having said that, our shopping centers are more diverse than ever, with exciting dining and service-oriented options included in the tenant mix, proving our initiative to meet the needs and demands of today’s consumers.
The macro economy and real estate markets performed well in 2017 and boded well for U.S. consumers. GDP growth, along with unemployment holding at a 17-year low of 4.1 percent as of December 31, 2017 per Business Insider, raised consumer confidence at the end of the year. Retailers are riding high after enthusiastic U.S. consumers spent 5.5 percent more than expected during the 2017 holiday season, with CNN Money reporting that it marked the biggest increase since 2010.
37
LIQUIDITY AND CAPITAL RESOURCES
General
Our primary uses and sources of cash are as follows:
Uses
Short-term liquidity and capital needs such as:
|
|
• |
Interest & principal payments on mortgage loans and Credit Facility |
|
|
• |
Property operating expenses |
|
|
• |
General and administrative expenses |
|
|
• |
Distributions to stockholders |
|
|
• |
Fees payable to our Business Manager and Real Estate Manager |
|
|
• |
Repurchases of shares under the SRP |
|
|
• |
Payment of deferred investment property acquisition obligation |
|
|
• |
Commitments under joint venture agreements |
Long-term liquidity and capital needs such as:
|
|
• |
Acquisitions of real estate directly or through joint ventures |
|
|
• |
Payment of deferred investment property acquisition obligation |
|
|
• |
Interest & principal payments on mortgage loans and Credit Facility |
|
|
• |
Capital expenditures, tenant improvements and leasing commissions |
|
|
• |
Repurchases of shares under the SRP |
Sources
|
|
• |
Cash receipts from our tenants |
|
|
• |
Sale of shares through the DRP |
|
|
• |
Proceeds from new or refinanced mortgage loans |
|
|
• |
Borrowing on our Credit Facility |
|
|
• |
Interest on mezzanine loans |
As of December 31, 2017, we had total debt outstanding of approximately $693.3 million, excluding mortgage premiums and unamortized debt issuance costs, which bore interest at a weighted average interest rate of 3.63% per annum. As of December 31, 2017 and December 31, 2016, our borrowings were 49% and 45%, respectively, of the purchase price of our investment properties. As of December 31, 2017, we had borrowed $83.8 million of the $110 million available under our Credit Facility. At December 31, 2017 our cash and cash equivalents balance is $12 million.
The acquisition of certain of the Company’s properties included an earnout component to the purchase price that was recorded as a deferred investment property acquisition obligation. The maximum potential earnout payment was $2.0 million at December 31, 2017.
For information related to our debt maturities reference is made to Note 7 – “Debt and Derivative Instruments” which is included in our December 31, 2017 Notes to Consolidated Financial Statements in Item 8.
38
|
|
|
For the year ended December 31, |
|
|
Change |
|
||||||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2017 vs. 2016 |
|
|
2016 vs. 2015 |
|
|||||
|
|
|
(Dollar amounts in thousands) |
|
|||||||||||||||||
|
Net cash flows provided by operating activities |
|
$ |
50,871 |
|
|
$ |
36,203 |
|
|
$ |
27,080 |
|
|
$ |
14,668 |
|
|
$ |
9,123 |
|
|
Net cash flows used in investing activities |
|
$ |
(82,226 |
) |
|
$ |
(88,034 |
) |
|
$ |
(740,542 |
) |
|
$ |
5,808 |
|
|
$ |
652,508 |
|
|
Net cash flows provided by (used in) financing activities |
|
$ |
32,398 |
|
|
$ |
(21,151 |
) |
|
$ |
691,434 |
|
|
$ |
53,549 |
|
|
$ |
(712,585 |
) |
Operating activities
Cash provided by operating activities increased approximately $14.7 million during 2017 compared to 2016 and approximately $9.1 million during 2016 compared to 2015. The increase from 2015 to 2016 and from 2016 to 2017 is primarily due to the growth of our real estate portfolio (acquisition of two properties in 2016 and three properties in 2017).
Investing activities
|
|
|
For the year ended December 31, |
|
|
Change |
|
||||||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2017 vs. 2016 |
|
|
2016 vs. 2015 |
|
|||||
|
|
|
(Dollar amounts in thousands) |
|
|||||||||||||||||
|
Purchases of investment properties |
|
$ |
(69,953 |
) |
|
$ |
(79,034 |
) |
|
$ |
(734,331 |
) |
|
$ |
9,081 |
|
|
$ |
655,297 |
|
|
Capital expenditures |
|
$ |
(6,209 |
) |
|
$ |
(9,320 |
) |
|
$ |
(4,326 |
) |
|
$ |
3,111 |
|
|
$ |
(4,994 |
) |
|
Investment in unconsolidated joint ventures |
|
$ |
(6,917 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(6,917 |
) |
|
$ |
— |
|
|
Other assets and restricted escrows |
|
$ |
853 |
|
|
$ |
320 |
|
|
$ |
(1,885 |
) |
|
$ |
533 |
|
|
$ |
2,205 |
|
|
Net cash used in investing activities |
|
$ |
(82,226 |
) |
|
$ |
(88,034 |
) |
|
$ |
(740,542 |
) |
|
$ |
5,808 |
|
|
$ |
652,508 |
|
During the years ended December 31, 2017 and 2016, cash was used primarily for acquisition related activities and capital improvements at certain of our properties. We used less cash in our investing activities during the years ended December 31, 2017 and 2016 than the year ended December 31, 2015 primarily due to the decrease in acquisitions from 23 properties in 2015 to 2 properties in 2016 and 3 properties in 2017. The decrease in cash used in investing activities in 2017 was partially offset with our investment in an unconsolidated joint venture.
Financing activities
|
|
|
For the year ended December 31, |
|
|
Change |
|
||||||||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
2017 vs. 2016 |
|
|
2016 vs. 2015 |
|
|||||
|
|
|
(Dollar amounts in thousands) |
|
|||||||||||||||||
|
Total changes related to debt |
|
$ |
85,485 |
|
|
$ |
22,841 |
|
|
$ |
342,232 |
|
|
$ |
62,644 |
|
|
$ |
(319,391 |
) |
|
Proceeds from DRP, net of shares repurchased |
|
$ |
7,085 |
|
|
$ |
19,077 |
|
|
$ |
17,495 |
|
|
$ |
(11,992 |
) |
|
$ |
1,582 |
|
|
Distributions paid |
|
$ |
(53,315 |
) |
|
$ |
(52,358 |
) |
|
$ |
(42,537 |
) |
|
$ |
(957 |
) |
|
$ |
(9,821 |
) |
|
Proceeds (payment) from offering net of offering costs |
|
$ |
— |
|
|
$ |
(199 |
) |
|
$ |
379,131 |
|
|
$ |
199 |
|
|
$ |
(379,330 |
) |
|
Sponsor contribution |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,283 |
|
|
$ |
— |
|
|
$ |
(3,283 |
) |
|
Due to related parties |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(1,630 |
) |
|
$ |
— |
|
|
$ |
1,630 |
|
|
Other |
|
$ |
(6,857 |
) |
|
$ |
(10,512 |
) |
|
$ |
(6,540 |
) |
|
$ |
3,655 |
|
|
$ |
(3,972 |
) |
|
Net cash provided by (used in) financing activities |
|
$ |
32,398 |
|
|
$ |
(21,151 |
) |
|
$ |
691,434 |
|
|
$ |
53,549 |
|
|
$ |
(712,585 |
) |
During the years ended December 31, 2017, 2016 and 2015, we generated proceeds from the sale of shares, net of offering costs paid and share repurchases, of approximately $7.1 million, $18.9 million and $396.6 million, respectively. During the years ended December 31, 2017, 2016 and 2015, we generated approximately $135.0 million, $222.3 million and $342.4 million, respectively, from borrowings. During the years ended December 31, 2017, 2016 and 2015, we paid approximately $53.3 million, $52.4 million and $42.5 million, respectively, in distributions. We also paid off mortgage debt, reduced the amount outstanding on our Credit Facility and paid debt issuance costs in the amount $49.5 million, $199.5 million and $0.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.
39
Our organizational documents permit us to pay distributions from sources other than cash flow from operations. Specifically, some or all of our distributions may be paid from retained cash flow, from borrowings and from cash flow from investing activities, including the net proceeds from the sale of our assets, or from the net proceeds of the Offering and DRP. Accordingly, until such time as we are generating cash flow from operations sufficient to cover distributions, we have and will likely continue to pay distributions from the proceeds of the DRP. We have not established any limit on the extent to which we may use alternate sources, including borrowings and DRP proceeds, to pay distributions. Twenty four percent (24%) of the distributions paid to stockholders, or approximately $38.8 million through December 31, 2017, were paid from the net proceeds of our Offering and the DRP. Our Offering concluded on October 16, 2015. Thus, we will not have any additional proceeds from the Offering available to pay distributions. To the extent we continue to pay cash distributions, or a portion thereof, from sources other than cash flow from operations, we will have less capital available to invest in properties and other real estate-related assets, the book value and estimated value per share may decline, and there is no assurance that we will be able to sustain distributions at that level.
Distributions
A summary of the distributions declared, distributions paid and cash flows provided by operations for the years ended December 31, 2017, 2016 and 2015 follows (Dollar amounts in thousands, except per share amounts):
|
Year Ended December 31, |
|
Distributions Declared |
|
|
Distributions Declared Per Share (1) |
|
|
Cash |
|
|
Reinvested via DRP |
|
|
Total |
|
|
Cash Flows From Operations |
|
|
Net Offering Proceeds (3) (4) |
|
|||||||
|
2017 |
|
$ |
53,364 |
|
|
$ |
1.50 |
|
|
$ |
26,246 |
|
|
$ |
27,069 |
|
|
$ |
53,315 |
|
|
$ |
50,871 |
|
|
$ |
— |
|
|
2016 |
|
$ |
52,449 |
|
|
$ |
1.50 |
|
|
$ |
24,527 |
|
|
$ |
27,831 |
|
|
$ |
52,358 |
|
|
$ |
36,203 |
|
|
$ |
— |
|
|
2015 (2) |
|
$ |
44,908 |
|
|
$ |
1.58 |
|
|
$ |
21,709 |
|
|
$ |
20,828 |
|
|
$ |
42,537 |
|
|
$ |
27,080 |
|
|
$ |
379,131 |
|
|
(1) |
Per share amounts are based on weighted average number of common shares outstanding. |
|
(2) |
On February 19, 2015, our Sponsor contributed $3,283 to our capital which we paid as a special distribution to stockholders of record as of January 30, 2015. For U.S. GAAP purposes, these monies have been treated as a contribution of capital from our Sponsor, although our Sponsor has not received, and will not receive, any additional shares of our common stock for this contribution. We treated this contribution as taxable income to us. |
|
(3) |
For the year ended December 31, 2017, distributions of $2,444 were paid from the proceeds of our DRP and the remaining distributions were paid from cash flow of operations. For the years ended December 31, 2016 and 2015, respectively, distributions of $16,155 and $15,457 were paid from the cumulative net proceeds of our Offering and DRP and the remaining distributions were paid from cash flows from operations. |
|
(4) |
The Offering commenced on October 18, 2012 and concluded on October 16, 2015. |
Results of Operations
The following discussion is based on our consolidated financial statements for the years ended December 31, 2017, 2016 and 2015.
This section describes and compares our results of operations for the years ended December 31, 2017, 2016 and 2015. We generate primarily all of our net operating income from property operations. In order to evaluate our overall portfolio, management analyzes the net operating income of properties that we have owned and operated for the periods presented, in their entirety, referred to herein as “same store” properties. By evaluating the property net operating income of our "same store" properties, management is able to monitor the operations of our existing properties for comparable periods to measure the performance of our current portfolio and determine the effects of our new acquisitions on net income. (Dollar amounts in thousands)
40
Comparison of the Years ended December 31, 2017 and 2016
A total of 54 investment properties that were acquired on or before January 1, 2016 represent our “same store” properties during the years ended December 31, 2017 and 2016. “Non-same store,” as reflected in the table below, consists of properties acquired after January 1, 2016. For the year ended December 31, 2017, 5 properties constituted non-same store properties and for the year ended December 31, 2016, 2 properties constituted non-same store properties. The following table presents the property net operating income broken out between same store and non-same store, prior to straight-line income, net, amortization of intangibles, interest, and depreciation and amortization for the years ended December 31, 2017 and 2016, along with a reconciliation to net loss, calculated in accordance with U.S. GAAP.
|
|
Total |
|
|
Same Store |
|
|
Non-Same Store |
|
|||||||||||||||||||||||||||
|
|
For the year ended December 31, |
|
|
For the year ended December 31, |
|
|
For the year ended December 31, |
|
|||||||||||||||||||||||||||
|
|
2017 |
|
|
2016 |
|
|
Change |
|
|
2017 |
|
|
2016 |
|
|
Change |
|
|
2017 |
|
|
2016 |
|
|
Change |
|
|||||||||
|
Rental income |
$ |
95,816 |
|
|
$ |
90,228 |
|
|
$ |
5,588 |
|
|
$ |
86,856 |
|
|
$ |
87,097 |
|
|
$ |
(241 |
) |
|
$ |
8,960 |
|
|
$ |
3,131 |
|
|
$ |
5,829 |
|
|
Tenant recovery income |
|
29,101 |
|
|
|
26,526 |
|
|
|
2,575 |
|
|
|
26,766 |
|
|
|
25,785 |
|
|
|
981 |
|
|
|
2,335 |
|
|
|
741 |
|
|
|
1,594 |
|
|
Other property income |
|
472 |
|
|
|
1,056 |
|
|
|
(584 |
) |
|
|
469 |
|
|
|
1,055 |
|
|
|
(586 |
) |
|
|
3 |
|
|
|
1 |
|
|
|
2 |
|
|
Total income |
$ |
125,389 |
|
|
$ |
117,810 |
|
|
$ |
7,579 |
|
|
$ |
114,091 |
|
|
$ |
113,937 |
|
|
$ |
154 |
|
|
$ |
11,298 |
|
|
$ |
3,873 |
|
|
$ |
7,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
$ |
21,681 |
|
|
$ |
20,745 |
|
|
$ |
936 |
|
|
$ |
20,022 |
|
|
$ |
20,109 |
|
|
$ |
(87 |
) |
|
$ |
1,659 |
|
|
$ |
636 |
|
|
$ |
1,023 |
|
|
Real estate tax expense |
|
15,992 |
|
|
|
14,202 |
|
|
|
1,790 |
|
|
|
14,665 |
|
|
|
13,771 |
|
|
|
894 |
|
|
|
1,327 |
|
|
|
431 |
|
|
|
896 |
|
|
Total property operating expenses |
$ |
37,673 |
|
|
$ |
34,947 |
|
|
$ |
2,726 |
|
|
$ |
34,687 |
|
|
$ |
33,880 |
|
|
$ |
807 |
|
|
$ |
2,986 |
|
|
$ |
1,067 |
|
|
$ |
1,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property net operating income |
$ |
87,716 |
|
|
$ |
82,863 |
|
|
$ |
4,853 |
|
|
$ |
79,404 |
|
|
$ |
80,057 |
|
|
$ |
(653 |
) |
|
$ |
8,312 |
|
|
$ |
2,806 |
|
|
$ |
5,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line income, net |
$ |
1,678 |
|
|
$ |
2,164 |
|
|
$ |
(486 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization |
|
1,402 |
|
|
|
809 |
|
|
|
593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
(5,200 |
) |
|
|
(5,908 |
) |
|
|
708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related costs |
|
(754 |
) |
|
|
1,556 |
|
|
|
(2,310 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business management fee |
|
(9,196 |
) |
|
|
(8,580 |
) |
|
|
(616 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for impairment of investment property |
|
(8,530 |
) |
|
|
— |
|
|
|
(8,530 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
(61,804 |
) |
|
|
(59,860 |
) |
|
|
(1,944 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(24,582 |
) |
|
|
(21,635 |
) |
|
|
(2,947 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
147 |
|
|
|
378 |
|
|
|
(231 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings (loss) of unconsolidated entity |
|
21 |
|
|
|
252 |
|
|
|
(231 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(19,102 |
) |
|
$ |
(7,961 |
) |
|
$ |
(11,141 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss. Net loss was $19,102 and $7,961 for the years ended December 31, 2017 and 2016, respectively.
Total property net operating income. On a “same store” basis, comparing the results of operations of investment properties owned during the year ended December 31, 2017, with the results of the same investment properties owned during the year ended December 31, 2016, property net operating income decreased $653, total property income increased $154, and total property operating expenses including real estate tax expense increased $807 for the year ended December 31, 2017 compared to the year ended December 31, 2016.
The increase in “same store” total property income is primarily due to an increase in tenant recovery income partially offset by a decrease in other property income and a slight decrease in rental income.
The increase in “same store” total property operating expenses is primarily due to an increase in current year real estate tax expense.
“Non-same store” total property net operating income increased $5,506 during 2017 as compared to 2016. The increase is a result of acquiring 5 retail properties after January 1, 2016. On a “non-same store” basis, total property income increased $7,425 and total property operating expenses increased $1,919 during the year ended December 31, 2017 as a result of these acquisitions.
41
Straight-line income, net. Straight-line income decreased $486 in 2017 compared to 2016. This decrease is due to certain tenant rent abatements in 2016 that increased straight-line rental income.
Intangible amortization. Intangible amortization income increased $593 in 2017 compared to 2016. The increase is primarily attributable to changes in intangible assets and liabilities as a result of recent acquisitions.
General and administrative expenses. General and administrative expenses decreased $708 in 2017 compared to 2016. This decrease is primarily due to lower stock administration expenses.
Acquisition related costs. Acquisition related expenses increased $2,819 in 2017 compared to 2016. The increase is attributed to adjustments to deferred investment property acquisition obligations.
Business management fee. Business management fees increased $616 in 2017 compared to 2016. The increase is due to the acquisition of real estate which increased assets under management.
Provision for impairment of investment property. Based on the results of our evaluations for impairment, we recorded impairment charges of $8,530 for the year ended December 31, 2017.
Depreciation and amortization. Depreciation and amortization increased $1,944 in 2017, as compared to 2016. The increase is primarily due to acquisitions in 2016 and 2017.
Interest expense. Interest expense increased $2,946 in 2017 compared to 2016. The increase is primarily due to additional financing of properties after January 1, 2016, amounts drawn under the Credit Facility and higher interest rates on our floating rate debt.
Interest and other income. Interest and other income decreased $231. The decrease is primarily due to lower settlement income and interest earned as a result of lower cash balances in 2017 compared to 2016.
42
Comparison of the Years ended December 31, 2016 and 2015
A total of 31 investment properties that were acquired on or before January 1, 2015 represent our “same store” properties during the years ended December 31, 2016 and 2015. “Non-same store,” as reflected in the table below, consists of properties acquired after January 1, 2015. For the year ended December 31, 2016, 25 properties constituted non-same store properties and for the year ended December 31, 2015, 23 properties were non-same store properties. The following table presents the property net operating income broken out between same store and non-same store, prior to straight-line income, net, amortization of intangibles, interest, and depreciation and amortization for the years ended December 31, 2016 and 2015, along with a reconciliation to net loss, calculated in accordance with U.S. GAAP.
|
|
Total |
|
|
Same Store |
|
|
Non-Same Store |
|
|||||||||||||||||||||||||||
|
|
For the year ended December 31, |
|
|
For the year ended December 31, |
|
|
For the year ended December 31, |
|
|||||||||||||||||||||||||||
|
|
2016 |
|
|
2015 |
|
|
Change |
|
|
2016 |
|
|
2015 |
|
|
Change |
|
|
2016 |
|
|
2015 |
|
|
Change |
|
|||||||||
|
Rental income |
$ |
90,228 |
|
|
$ |
58,365 |
|
|
$ |
31,863 |
|
|
$ |
32,378 |
|
|
$ |
32,805 |
|
|
$ |
(427 |
) |
|
$ |
57,850 |
|
|
$ |
25,560 |
|
|
$ |
32,290 |
|
|
Tenant recovery income |
|
26,526 |
|
|
|
15,434 |
|
|
|
11,092 |
|
|
|
8,204 |
|
|
|
8,353 |
|
|
|
(149 |
) |
|
|
18,322 |
|
|
|
7,081 |
|
|
|
11,241 |
|
|
Other property income |
|
1,056 |
|
|
|
148 |
|
|
|
908 |
|
|
|
879 |
|
|
|
112 |
|
|
|
767 |
|
|
|
177 |
|
|
|
36 |
|
|
|
141 |
|
|
Total income |
$ |
117,810 |
|
|
$ |
73,947 |
|
|
$ |
43,863 |
|
|
$ |
41,461 |
|
|
$ |
41,270 |
|
|
$ |
191 |
|
|
$ |
76,349 |
|
|
$ |
32,677 |
|
|
$ |
43,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
$ |
20,745 |
|
|
$ |
11,667 |
|
|
$ |
9,078 |
|
|
$ |
6,424 |
|
|
$ |
6,728 |
|
|
$ |
(304 |
) |
|
$ |
14,321 |
|
|
$ |
4,939 |
|
|
$ |
9,382 |
|
|
Real estate tax expense |
|
14,202 |
|
|
|
8,938 |
|
|
|
5,264 |
|
|
|
4,551 |
|
|
|
4,705 |
|
|
|
(154 |
) |
|
|
9,651 |
|
|
|
4,233 |
|
|
|
5,418 |
|
|
Total property operating expenses |
$ |
34,947 |
|
|
$ |
20,605 |
|
|
$ |
14,342 |
|
|
$ |
10,975 |
|
|
$ |
11,433 |
|
|
$ |
(458 |
) |
|
$ |
23,972 |
|
|
$ |
9,172 |
|
|
$ |
14,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property net operating income |
$ |
82,863 |
|
|
$ |
53,342 |
|
|
$ |
29,521 |
|
|
$ |
30,486 |
|
|
$ |
29,837 |
|
|
$ |
649 |
|
|
$ |
52,377 |
|
|
$ |
23,505 |
|
|
$ |
28,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line income, net |
$ |
2,164 |
|
|
$ |
1,736 |
|
|
$ |
428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization |
|
809 |
|
|
|
676 |
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
(5,908 |
) |
|
|
(4,961 |
) |
|
|
(947 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related costs |
|
1,556 |
|
|
|
(13,903 |
) |
|
|
15,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business management fee |
|
(8,580 |
) |
|
|
(5,501 |
) |
|
|
(3,079 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
(59,860 |
) |
|
|
(34,573 |
) |
|
|
(25,287 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(21,635 |
) |
|
|
(10,339 |
) |
|
|
(11,296 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
378 |
|
|
|
205 |
|
|
|
173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in (loss) earnings of unconsolidated entity |
|
252 |
|
|
|
(118 |
) |
|
|
370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(7,961 |
) |
|
$ |
(13,436 |
) |
|
$ |
5,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss. Net loss was $7,961 and $13,436 for the years ended December 31, 2016 and 2015, respectively.
Total property net operating income. On a “same store” basis, comparing the results of operations of investment properties owned during the year ended December 31, 2016, with the results of the same investment properties owned during the year ended December 31, 2015, property net operating income increased $649, total property income increased $191, and total property operating expenses including real estate tax expense decreased $458 for the year ended December 31, 2016 compared to the year ended December 31, 2015.
The increase in “same store” total property income is primarily due to termination fee income collected in 2016 offset with a reduction in average occupancy from 97.0% to 95.2%.
The decrease in “same store” total property operating expenses is primarily due to a decrease in real estate tax expense and bad debt expense during 2016 as compared to 2015.
“Non-same store” total property net operating income increased $28,872 during 2016 as compared to 2015. The increase is a result of acquiring 25 retail properties after January 1, 2015. On a “non-same store” basis, total property income increased $43,672 and total property operating expenses increased $14,800 during the year ended December 31, 2016 as a result of these acquisitions.
43
Straight-line income, net. Straight-line income increased $428 in 2016 compared to 2015. This increase is due to purchases of investment properties after January 1, 2015.
Intangible amortization. Intangible amortization income increased $133 in 2016 compared to 2015. The increase is primarily attributable to changes in intangible assets and liabilities due to acquisitions.
General and administrative expenses. General and administrative expenses increased $947 in 2016 compared to 2015. This increase is primarily due to the growth in our real estate portfolio.
Acquisition related costs. Acquisition related expenses decreased $15,459 in 2016 compared to 2015. The decrease is attributed to fewer acquisitions and adjustments to deferred investment property acquisition obligations in 2016 compared to 2015. These expenses include acquisition, dead deal and transaction related costs and relate to both closed and potential transactions. These costs include third party due diligence costs such as appraisals, environmental studies, and legal fees as well as acquisition fees and time and travel expense reimbursements to the Sponsor and its affiliates.
Business management fee. Business management fees increased $3,079 in 2016 compared to 2015. The increase is due to the acquisition of real estate which increased assets under management.
Depreciation and amortization. Depreciation and amortization increased $25,287 in 2016 compared to 2015. This increase is due to the acquisition of additional retail properties after January 1, 2015.
Interest expense. Interest expense increased $11,296 in 2016 compared to 2015. The increase is primarily due to financing additional properties after January 1, 2015 and amounts drawn under the Credit Facility.
Interest and other income. Interest and other income increased $173. The increase is primarily due to settlement income in 2016.
Equity in earnings (loss) of unconsolidated entity. Equity in earnings (loss) of unconsolidated entity increased $370 due to the performance of the Captive.
Leasing Activity
The following table sets forth leasing activity during the year ended December 31, 2017. Leases with terms of less than 12 months have been excluded from the table.
|
|
|
Number of Leases Signed |
|
|
Gross Leasable Area |
|
|
New Contractual Rent per Square Foot |
|
|
Prior Contractual Rent per Square Foot |
|
|
% Change over Prior Annualized Base Rent |
|
|
Weighted Average Lease Term |
|
|
Tenant Allowances per Square Foot |
|
|||||||
|
Comparable Renewal Leases |
|
|
66 |
|
|
|
445,178 |
|
|
$ |
16.75 |
|
|
$ |
15.90 |
|
|
|
5.3 |
% |
|
|
5.4 |
|
|
$ |
0.36 |
|
|
Comparable New Leases |
|
|
6 |
|
|
|
14,729 |
|
|
$ |
27.26 |
|
|
$ |
20.15 |
|
|
|
35.3 |
% |
|
|
6.1 |
|
|
$ |
22.31 |
|
|
Non-Comparable New and Renewal Leases (a) |
|
|
37 |
|
|
|
146,308 |
|
|
$ |
14.41 |
|
|
N/A |
|
|
N/A |
|
|
|
8.4 |
|
|
$ |
13.36 |
|
||
|
Total |
|
|
109 |
|
|
|
606,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes leases signed on units that were vacant for over 12 months, leases signed without fixed rent amounts and leases signed where the previous and current lease do not have similar lease structures |
Non-U.S. GAAP Financial Measures
Accounting for real estate assets in accordance with U.S. GAAP assumes the value of real estate assets is reduced over time. Because real estate values may rise and fall with market conditions, operating results from real estate companies that use U.S. GAAP accounting may not present a complete view of their performance. We use Funds from Operations, or “FFO”, a widely accepted metric to evaluate our performance. FFO provides a supplemental measure to compare our performance and operations to other REITs. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or “NAREIT”, has promulgated a standard known as FFO, which it believes more accurately reflects the operating performance of a REIT. As defined by NAREIT, FFO means net income (loss) computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of depreciable properties, plus depreciation and amortization and impairment charges on depreciable
44
property after adjustments for unconsolidated entities in which the REIT holds an interest. We have adopted the NAREIT definition for computing FFO.
Under U.S. GAAP, acquisition related costs are treated differently if the acquisition is a business combination or an asset acquisition. An acquisition of a single property will likely be treated as an asset acquisition as opposed to a business combination and acquisition related costs will be capitalized rather than expensed when incurred. Publicly registered, non-listed REITs typically engage in a significant amount of acquisition activity in the early years of their operations, and thus incur significant acquisition related costs, during these initial years. Although other start up entities may engage in significant acquisition activity during their initial years, REITs such as us that are not listed on an exchange are unique in that they typically have a limited timeframe during which they acquire a significant number of properties and thus incur significant acquisition related costs. Due to the above factors and other unique features of publicly registered, non-listed REITs, the IPA, an industry trade group, published a standardized measure known as Modified Funds from Operations, or “MFFO”, which the IPA has promulgated as a supplemental measure for publicly registered non-listed REITs and which may be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT.
MFFO excludes expensed costs associated with investing activities, some of which are acquisition related costs that affect our operations only in periods in which properties are acquired, and other non-operating items that are included in FFO. By excluding acquisition related costs, the use of MFFO provides another measure of our operating performance. Because MFFO may be a recognized measure of operating performance within the non-listed REIT industry, MFFO and the adjustments used to calculate it may be useful in order to evaluate our performance against other non-listed REITs. Like FFO, MFFO is not equivalent to our net income or loss as determined under U.S. GAAP, as detailed in the table below, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we continue to acquire a significant amount of properties. MFFO should only be used as a measurement of our operating performance while we are acquiring a significant amount of properties because it excludes, among other things, acquisition costs incurred during the periods in which properties were acquired.
We believe our definition of MFFO, a non-U.S. GAAP measure, is consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the “Practice Guideline,” issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of U.S. GAAP net income: acquisition fees and expenses; amounts relating to straight-line rents and amortization of above and below market lease assets and liabilities, accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.
Our presentation of FFO and MFFO may not be comparable to other similarly titled measures presented by other REITs. We believe that the use of FFO and MFFO provides a more complete understanding of our operating performance to stockholders and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs. Neither FFO nor MFFO is intended to be an alternative to “net income” or to “cash flows from operating activities” as determined by U.S. GAAP as a measure of our capacity to pay distributions. Management uses FFO and MFFO to compare our operating performance to that of other REITs and to assess our operating performance.
Our FFO and MFFO for the years ended December 31, 2017, 2016 and 2015 are calculated as follows (Dollar amounts in thousands):
|
|
|
|
|
For the year ended December 31, |
|
|||||||||
|
|
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
|
|
Net loss |
|
$ |
(19,102 |
) |
|
$ |
(7,961 |
) |
|
$ |
(13,436 |
) |
|
Add: |
|
Depreciation and amortization related to investment properties |
|
|
61,804 |
|
|
|
59,860 |
|
|
|
34,573 |
|
|
|
|
Provision for impairment of investment property |
|
|
8,530 |
|
|
|
— |
|
|
|
— |
|
|
|
|
Funds from operations (FFO) |
|
|
51,232 |
|
|
|
51,899 |
|
|
|
21,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: |
|
Acquisition related costs |
|
|
754 |
|
|
|
(1,556 |
) |
|
|
13,903 |
|
|
Less: |
|
Amortization of acquired market lease intangibles, net |
|
|
(1,415 |
) |
|
|
(812 |
) |
|
|
(652 |
) |
|
|
|
Straight-line income, net |
|
|
(1,678 |
) |
|
|
(2,164 |
) |
|
|
(1,736 |
) |
|
|
|
Modified funds from operations (MFFO) |
|
$ |
48,893 |
|
|
$ |
47,367 |
|
|
$ |
32,652 |
|
45
Our accounting policies have been established to conform with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. Our significant accounting policies are described in Note 2 – “Summary of Significant Accounting Policies” which is included in our December 31, 2017 Notes to Consolidated Financial Statements in Item 8. We have identified three significant accounting policies as critical accounting policies.
We consider these policies to be critical because they require our management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If management’s judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses.
Acquisitions
Prior to the adoption of ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, all costs related to finding, analyzing and negotiating a transaction were expensed as incurred as acquisition related costs, whether or not the acquisition was completed. These expenses would include acquisition fees, if any, paid to our Business Manager. We early adopted the ASU effective October 1, 2016.
We allocate the purchase price of each acquired business between tangible and intangible assets at full fair value at the date of the transaction. Such tangible and intangible assets include land, building and improvements, acquired above market and below market leases, in-place lease value, customer relationships (if any), and any assumed financing that is determined to be above or below market terms. The allocation of the purchase price is an area that requires judgment and significant estimates. We use the information contained in independent appraisals, valuation reports or other market sources as the basis for the allocation to land and building improvements.
Impairment of Investment Properties
We assess the carrying values of the respective long-lived assets, whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. If it is determined that the carrying value is not recoverable because the undiscounted cash flows do not exceed the carrying value, we will be required to record an impairment loss to the extent that the carrying value exceeds fair value. The valuation and possible subsequent impairment of investment properties will be a significant estimate that can change based on our continuous process of analyzing each property and reviewing assumptions about uncertain inherent factors, as well as the economic condition of the property at a particular point in time.
We also evaluate our equity method investments for impairment indicators. The valuation analysis considers the investment positions in relation to the underlying business and activities of our investment and identifies potential declines in fair value. An impairment loss should be recognized if a decline in value of the investment has occurred that is considered to be other than temporary, without ability to recover or sustain operations that would support the value of the investment.
Revenue Recognition
We commence revenue recognition on our leases based on a number of factors. In most cases, revenue recognition under a lease will begin when the lessee takes possession of or controls the physical use of the leased asset. Generally, this will occur on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If we are the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete.
We recognize rental income on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rent receivable in the accompanying consolidated balance sheets. Reimbursements from tenants for recoverable real estate tax and operating expenses are accrued as revenue in the period the applicable expenses are incurred. We make certain assumptions and judgments in estimating the reimbursements at the end of each reporting period. We do not expect the actual results to materially differ from the estimated reimbursement.
46
We recognize lease termination income if there is a signed termination letter agreement, all of the conditions of the agreement have been met, collectability is reasonably assured and the tenant is no longer occupying the property. Upon early lease termination, we provide for losses related to unrecovered intangibles and other assets.
As a lessor, we defer the recognition of contingent rental income, such as percentage rent, until the specified target that triggered the contingent rental income is achieved.
Recent Accounting Pronouncements
For information related to recently issued accounting pronouncements, reference is made to Note 2 – “Summary of Significant Accounting Policies” which is included in our December 31, 2017 Notes to Consolidated Financial Statements in Item 8.
Contractual Obligations
Our mortgages payable are generally non-recourse to us. We have, however, guaranteed the full amount of each of the mortgages payable by our subsidiaries in the event that the applicable subsidiary fails to provide access or information to the properties or fails to obtain a lender’s prior written consent to any liens on or transfers of any of the properties, and in the event of any losses, costs or damages incurred by a lender as a result of fraud or intentional misrepresentation of the subsidiary borrower, gross negligence or willful misconduct, material waste of the properties and the breach of any representation or warranty concerning environmental laws, among other things.
From time to time, we acquire properties subject to the obligation to pay the seller additional monies depending on the future leasing and occupancy of the property. These earnout payments are based on a predetermined formula. Each earnout agreement has a time limit of generally one to three years and other parameters regarding the obligation to pay any additional monies. If at the end of the time period, certain space has not been leased and occupied, we will not have any further obligation. As of December 31, 2017 and 2016, we had liabilities of $1.1 million and $6.9 million, respectively, recorded on the consolidated balance sheets as deferred investment property acquisition obligations. The maximum potential payment is $2.0 million at December 31, 2017.
The table below presents, on a consolidated basis, our obligations and commitments to make future payments under debt obligations (including interest) and ground leases as of December 31, 2017. Debt obligations under debt which is subject to variable rates reflect interest rates as of December 31, 2017 (Dollar amounts in thousands).
|
|
|
Payments due by period |
|
|
|
|
|
|||||||||||||||||||||
|
|
|
2018 |
|
|
2019 |
|
|
2020 |
|
|
2021 |
|
|
2022 |
|
|
Thereafter |
|
|
Total |
|
|||||||
|
Principal payments on debt |
|
$ |
15,481 |
|
|
$ |
236,465 |
|
|
$ |
897 |
|
|
$ |
84,272 |
|
|
$ |
126,631 |
|
|
$ |
229,575 |
|
|
$ |
693,321 |
|
|
Interest payments on debt |
|
|
25,412 |
|
|
|
21,980 |
|
|
|
16,577 |
|
|
|
14,446 |
|
|
|
10,189 |
|
|
|
17,959 |
|
|
|
106,563 |
|
|
Rental payments on ground lease |
|
|
1,140 |
|
|
|
1,140 |
|
|
|
1,140 |
|
|
|
1,140 |
|
|
|
1,202 |
|
|
|
89,641 |
|
|
|
95,403 |
|
|
Total |
|
$ |
42,033 |
|
|
$ |
259,585 |
|
|
$ |
18,614 |
|
|
$ |
99,858 |
|
|
$ |
138,022 |
|
|
$ |
337,175 |
|
|
$ |
895,287 |
|
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Market Risk
We are exposed to various market risks, including those caused by changes in interest rates and commodity prices. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and commodity prices. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We have entered into, and may continue to enter into, financial instruments to manage and reduce the impact of changes in interest rates. The counterparties are, and are expected to continue to be, major financial institutions.
47
We are exposed to interest rate changes primarily as a result of long-term debt used to purchase properties or other real estate assets and to fund capital expenditures.
As of December 31, 2017, we had outstanding debt of approximately $693.3 million, excluding mortgage premium and unamortized debt issuance costs, bearing interest rates ranging from 2.95% to 5.95% per annum. The weighted average interest rate was 3.63%, which includes the effect of interest rate swaps. As of December 31, 2017, the weighted average years to maturity for our mortgages and credit facility payable was approximately 4.2 years.
As of December 31, 2017, our fixed-rate debt consisted of secured mortgage financings with a carrying value of $171.9 million and a fair value of $171.0 million. Changes in interest rates do not affect interest expense incurred on our fixed-rate debt until their maturity or earlier repayment, but interest rates do affect the fair value of our fixed rate debt obligations. If market interest rates were to increase by 1% (100 basis points), the fair market value of our fixed-rate debt would decrease by $9.0 million at December 31, 2017. If market interest rates were to decrease by 1% (100 basis points), the fair market value of our fixed-rate debt would increase by $9.7 million at December 31, 2017.
At December 31, 2017, we had $138.0 million of debt or 19.90% of our total debt bearing interest at variable rates with a weighted average interest rate equal to 3.23% per annum. We had variable rate debt subject to swap agreements of $383.5 million or 55.32% of our total debt at December 31, 2017.
If interest rates on all debt which bears interest at variable rates as of December 31, 2017 increased by 1% (100 basis points), the increase in interest expense on all debt would decrease earnings and cash flows by approximately $1.4 million annually. If interest rates on all debt which bears interest at variable rates as of December 31, 2017 decreased by 1% (100 basis points), the decrease in interest expense would increase earnings and cash flows by the same amount.
With regard to variable rate financing, our Business Manager assesses our interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. Our Business Manager maintains risk management control systems to monitor interest rate cash flow risk attributable to both of our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions.
We use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions are determined in light of the facts and circumstances existing at the time of the hedge. We have used derivative financial instruments, specifically interest rate swap contracts, to hedge against interest rate fluctuations on variable rate debt, which exposes us to both credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us because the counterparty may not perform. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We seek to manage the market risk associated with interest-rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. There is no assurance we will be successful.
Derivatives
For information related to derivatives, reference is made to Note 7 – “Debt and Derivative Instruments” which is included in our December 31, 2017 Notes to Consolidated Financial Statements in Item 8.
48
INLAND REAL ESTATE INCOME TRUST, INC.
INDEX
|
|
|
Page |
|
|
|
|
|
|
50 |
|
|
|
|
|
|
Financial Statements: |
|
|
|
|
|
|
|
|
51 |
|
|
|
|
|
|
|
52 |
|
|
|
|
|
|
Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015 |
|
53 |
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 |
|
54 |
|
|
|
|
|
|
56 |
|
|
|
|
|
|
|
75 |
Schedules not filed:
All schedules other than the one listed in the Index have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
49
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Inland Real Estate Income Trust, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Inland Real Estate Income Trust, Inc. and subsidiaries (the Company) as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive loss, equity, and cash flows for each of the years in the three‑year period ended December 31, 2017, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ KPMG LLP
We have served as the Company’s auditor since 2011.
Chicago, Illinois
March 16, 2018
50
INLAND REAL ESTATE INCOME TRUST, INC.
(Dollar amounts in thousands, except per share amounts)
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
Investment properties: |
|
|
|
|
|
|
|
|
|
Land |
|
$ |
277,229 |
|
|
$ |
262,210 |
|
|
Building and other improvements |
|
|
1,011,688 |
|
|
|
971,021 |
|
|
Total |
|
|
1,288,917 |
|
|
|
1,233,231 |
|
|
Less accumulated depreciation |
|
|
(101,094 |
) |
|
|
(62,631 |
) |
|
Net investment properties |
|
|
1,187,823 |
|
|
|
1,170,600 |
|
|
Cash and cash equivalents |
|
|
11,904 |
|
|
|
10,861 |
|
|
Investment in unconsolidated entities |
|
|
7,125 |
|
|
|
126 |
|
|
Accounts and rent receivable |
|
|
15,152 |
|
|
|
11,671 |
|
|
Acquired lease intangible assets, net |
|
|
138,658 |
|
|
|
150,108 |
|
|
Deferred costs, net |
|
|
1,317 |
|
|
|
683 |
|
|
Other assets |
|
|
13,391 |
|
|
|
13,511 |
|
|
Total assets |
|
$ |
1,375,370 |
|
|
$ |
1,357,560 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
Mortgages and credit facility payable, net |
|
$ |
691,465 |
|
|
$ |
606,025 |
|
|
Accounts payable and accrued expenses |
|
|
10,167 |
|
|
|
7,270 |
|
|
Distributions payable |
|
|
4,537 |
|
|
|
4,488 |
|
|
Acquired intangible liabilities, net |
|
|
62,270 |
|
|
|
63,474 |
|
|
Deferred investment property acquisition obligations |
|
|
1,050 |
|
|
|
6,856 |
|
|
Due to related parties |
|
|
2,665 |
|
|
|
2,663 |
|
|
Other liabilities |
|
|
11,744 |
|
|
|
12,330 |
|
|
Total liabilities |
|
|
783,898 |
|
|
|
703,106 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Preferred stock, $.001 par value, 40,000,000 shares authorized, none outstanding |
|
|
— |
|
|
|
— |
|
|
Common stock, $.001 par value, 1,460,000,000 shares authorized, 35,498,444 and 35,262,283 shares issued and outstanding as of December 31, 2017 and 2016, respectively |
|
|
35 |
|
|
|
35 |
|
|
Additional paid in capital (net of offering costs of $87,059 as of December 31, 2017 and 2016) |
|
|
798,567 |
|
|
|
792,531 |
|
|
Accumulated distributions and net loss |
|
|
(212,883 |
) |
|
|
(140,417 |
) |
|
Accumulated other comprehensive income |
|
|
5,753 |
|
|
|
2,305 |
|
|
Total stockholders’ equity |
|
|
591,472 |
|
|
|
654,454 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,375,370 |
|
|
$ |
1,357,560 |
|
See accompanying notes to consolidated financial statements.
51
INLAND REAL ESTATE INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Dollar amounts in thousands, except per share amounts)
For the years ended December 31, 2017, 2016 and 2015
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
|
$ |
99,413 |
|
|
$ |
93,719 |
|
|
$ |
60,912 |
|
|
Tenant recovery income |
|
|
29,270 |
|
|
|
26,723 |
|
|
|
15,482 |
|
|
Other property income |
|
|
474 |
|
|
|
1,056 |
|
|
|
148 |
|
|
Total income |
|
|
129,157 |
|
|
|
121,498 |
|
|
|
76,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses |
|
|
22,369 |
|
|
|
21,460 |
|
|
|
11,850 |
|
|
Real estate tax expense |
|
|
15,992 |
|
|
|
14,202 |
|
|
|
8,938 |
|
|
General and administrative expenses |
|
|
5,200 |
|
|
|
5,908 |
|
|
|
4,961 |
|
|
Acquisition related costs |
|
|
754 |
|
|
|
(1,556 |
) |
|
|
13,903 |
|
|
Business management fee |
|
|
9,196 |
|
|
|
8,580 |
|
|
|
5,501 |
|
|
Provision for impairment of investment property |
|
|
8,530 |
|
|
|
— |
|
|
|
— |
|
|
Depreciation and amortization |
|
|
61,804 |
|
|
|
59,860 |
|
|
|
34,573 |
|
|
Total expenses |
|
|
123,845 |
|
|
|
108,454 |
|
|
|
79,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
5,312 |
|
|
|
13,044 |
|
|
|
(3,184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(24,582 |
) |
|
|
(21,635 |
) |
|
|
(10,339 |
) |
|
Interest and other income |
|
|
147 |
|
|
|
378 |
|
|
|
205 |
|
|
Equity in earnings (loss) of unconsolidated entity |
|
|
21 |
|
|
|
252 |
|
|
|
(118 |
) |
|
Net loss |
|
$ |
(19,102 |
) |
|
$ |
(7,961 |
) |
|
$ |
(13,436 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted |
|
$ |
(0.54 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and diluted |
|
|
35,571,249 |
|
|
|
34,963,827 |
|
|
|
27,737,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(19,102 |
) |
|
$ |
(7,961 |
) |
|
$ |
(13,436 |
) |
|
Unrealized gain (loss) on derivatives |
|
|
1,043 |
|
|
|
1,861 |
|
|
|
(4,612 |
) |
|
Reclassification adjustment for amounts included in net loss |
|
|
2,405 |
|
|
|
4,038 |
|
|
|
2,546 |
|
|
Comprehensive loss |
|
$ |
(15,654 |
) |
|
$ |
(2,062 |
) |
|
$ |
(15,502 |
) |
See accompanying notes to consolidated financial statements.
52
INLAND REAL ESTATE INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Dollar amounts in thousands)
For the years ended December 31, 2017, 2016 and 2015
|
|
|
Number of Shares |
|
|
Common Stock |
|
|
Additional Paid in Capital |
|
|
Accumulated Distributions and Net Loss |
|
|
Accumulated Other Comprehensive Income (Loss) |
|
|
Total |
|
||||||
|
Balance at December 31, 2014 |
|
|
16,798,765 |
|
|
$ |
17 |
|
|
$ |
374,633 |
|
|
$ |
(21,663 |
) |
|
$ |
(1,528 |
) |
|
$ |
351,459 |
|
|
Distributions declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(44,908 |
) |
|
|
— |
|
|
|
(44,908 |
) |
|
Proceeds from offering |
|
|
16,971,329 |
|
|
|
17 |
|
|
|
422,942 |
|
|
|
— |
|
|
|
— |
|
|
|
422,959 |
|
|
Offering costs |
|
|
— |
|
|
|
— |
|
|
|
(43,493 |
) |
|
|
— |
|
|
|
— |
|
|
|
(43,493 |
) |
|
Proceeds from distribution reinvestment plan |
|
|
876,978 |
|
|
|
1 |
|
|
|
20,827 |
|
|
|
— |
|
|
|
— |
|
|
|
20,828 |
|
|
Shares repurchased |
|
|
(155,464 |
) |
|
|
(1 |
) |
|
|
(3,809 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,810 |
) |
|
Discount on shares to related parties |
|
|
— |
|
|
|
— |
|
|
|
28 |
|
|
|
— |
|
|
|
— |
|
|
|
28 |
|
|
Unrealized loss on derivatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,612 |
) |
|
|
(4,612 |
) |
|
Reclassification adjustment for amounts included in net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,546 |
|
|
|
2,546 |
|
|
Sponsor contribution |
|
|
— |
|
|
|
— |
|
|
|
3,283 |
|
|
|
— |
|
|
|
— |
|
|
|
3,283 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13,436 |
) |
|
|
— |
|
|
|
(13,436 |
) |
|
Balance at December 31, 2015 |
|
|
34,491,607 |
|
|
|
34 |
|
|
|
774,411 |
|
|
|
(80,007 |
) |
|
|
(3,594 |
) |
|
|
690,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(52,449 |
) |
|
|
— |
|
|
|
(52,449 |
) |
|
Proceeds from distribution reinvestment plan |
|
|
1,213,419 |
|
|
|
1 |
|
|
|
27,830 |
|
|
|
— |
|
|
|
— |
|
|
|
27,831 |
|
|
Shares repurchased |
|
|
(442,743 |
) |
|
|
— |
|
|
|
(9,724 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9,724 |
) |
|
Unrealized gain on derivatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,861 |
|
|
|
1,861 |
|
|
Reclassification adjustment for amounts included in net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,038 |
|
|
|
4,038 |
|
|
Equity based compensation |
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,961 |
) |
|
|
— |
|
|
|
(7,961 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016 |
|
|
35,262,283 |
|
|
|
35 |
|
|
|
792,531 |
|
|
|
(140,417 |
) |
|
|
2,305 |
|
|
|
654,454 |
|
|
Distributions declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(53,364 |
) |
|
|
— |
|
|
|
(53,364 |
) |
|
Proceeds from distribution reinvestment plan |
|
|
1,197,415 |
|
|
|
1 |
|
|
|
27,068 |
|
|
|
— |
|
|
|
— |
|
|
|
27,069 |
|
|
Shares repurchased |
|
|
(961,698 |
) |
|
|
(1 |
) |
|
|
(21,065 |
) |
|
|
— |
|
|
|
— |
|
|
|
(21,066 |
) |
|
Unrealized gain on derivatives |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,043 |
|
|
|
1,043 |
|
|
Reclassification adjustment for amounts included in net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,405 |
|
|
|
2,405 |
|
|
Equity based compensation |
|
|
444 |
|
|
|
— |
|
|
|
33 |
|
|
|
— |
|
|
|
— |
|
|
|
33 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(19,102 |
) |
|
|
— |
|
|
|
(19,102 |
) |
|
Balance at December 31, 2017 |
|
|
35,498,444 |
|
|
$ |
35 |
|
|
$ |
798,567 |
|
|
$ |
(212,883 |
) |
|
$ |
5,753 |
|
|
$ |
591,472 |
|
See accompanying notes to consolidated financial statements.
53
INLAND REAL ESTATE INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
For the years ended December 31, 2017, 2016 and 2015
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(19,102 |
) |
|
$ |
(7,961 |
) |
|
$ |
(13,436 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
61,804 |
|
|
|
59,860 |
|
|
|
34,573 |
|
|
Provision for impairment of investment property |
|
|
8,530 |
|
|
|
— |
|
|
|
— |
|
|
Amortization of debt issuance costs and mortgage premiums, net |
|
|
397 |
|
|
|
359 |
|
|
|
5 |
|
|
Amortization of acquired market leases, net |
|
|
(1,415 |
) |
|
|
(812 |
) |
|
|
(652 |
) |
|
Amortization of equity based compensation |
|
|
33 |
|
|
|
14 |
|
|
|
— |
|
|
Straight-line income, net |
|
|
(1,678 |
) |
|
|
(2,164 |
) |
|
|
(1,736 |
) |
|
Discount on shares issued to related parties |
|
|
— |
|
|
|
— |
|
|
|
28 |
|
|
Equity in (earnings) loss of unconsolidated entity |
|
|
(21 |
) |
|
|
(252 |
) |
|
|
118 |
|
|
Distributions from unconsolidated entity |
|
|
146 |
|
|
|
126 |
|
|
|
— |
|
|
Payment of leasing fees |
|
|
(823 |
) |
|
|
(413 |
) |
|
|
(315 |
) |
|
Adjustment of contingent earnout liability |
|
|
575 |
|
|
|
(3,709 |
) |
|
|
(9 |
) |
|
Other non-cash adjustments |
|
|
(40 |
) |
|
|
(244 |
) |
|
|
(376 |
) |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
3,249 |
|
|
|
(1,324 |
) |
|
|
3,723 |
|
|
Accounts and rent receivable |
|
|
(1,020 |
) |
|
|
(1,386 |
) |
|
|
(3,392 |
) |
|
Due to related parties |
|
|
(150 |
) |
|
|
(5,891 |
) |
|
|
7,559 |
|
|
Other liabilities |
|
|
(118 |
) |
|
|
(197 |
) |
|
|
2,185 |
|
|
Other assets |
|
|
504 |
|
|
|
197 |
|
|
|
(1,195 |
) |
|
Net cash flows provided by operating activities |
|
|
50,871 |
|
|
|
36,203 |
|
|
|
27,080 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of investment properties |
|
|
(69,953 |
) |
|
|
(79,034 |
) |
|
|
(734,331 |
) |
|
Capital expenditures |
|
|
(6,209 |
) |
|
|
(9,320 |
) |
|
|
(4,326 |
) |
|
Investment in unconsolidated joint ventures |
|
|
(6,917 |
) |
|
|
— |
|
|
|
— |
|
|
Other assets and restricted escrows |
|
|
853 |
|
|
|
320 |
|
|
|
(1,885 |
) |
|
Net cash flows used in investing activities |
|
|
(82,226 |
) |
|
|
(88,034 |
) |
|
|
(740,542 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from offering |
|
|
— |
|
|
|
— |
|
|
|
422,959 |
|
|
Payment of offering costs |
|
|
— |
|
|
|
(199 |
) |
|
|
(43,828 |
) |
|
Payment of credit facility |
|
|
(43,000 |
) |
|
|
(141,000 |
) |
|
|
— |
|
|
Proceeds from credit facility |
|
|
95,800 |
|
|
|
72,000 |
|
|
|
100,000 |
|
|
Proceeds from mortgages payable |
|
|
39,179 |
|
|
|
150,335 |
|
|
|
242,377 |
|
|
Payment of mortgages payable |
|
|
(6,494 |
) |
|
|
(58,494 |
) |
|
|
(145 |
) |
|
Proceeds from the distribution reinvestment plan |
|
|
27,069 |
|
|
|
27,831 |
|
|
|
20,828 |
|
|
Shares repurchased |
|
|
(19,984 |
) |
|
|
(8,754 |
) |
|
|
(3,333 |
) |
|
Distributions paid |
|
|
(53,315 |
) |
|
|
(52,358 |
) |
|
|
(42,537 |
) |
|
Sponsor contribution |
|
|
— |
|
|
|
— |
|
|
|
3,283 |
|
|
Due to related parties |
|
|
— |
|
|
|
— |
|
|
|
(1,630 |
) |
|
Payment of deferred investment property acquisition obligation |
|
|
(6,415 |
) |
|
|
(8,838 |
) |
|
|
(3,061 |
) |
|
Payment of debt issuance costs |
|
|
(442 |
) |
|
|
(1,674 |
) |
|
|
(3,479 |
) |
|
Net cash flows provided by (used in) financing activities |
|
|
32,398 |
|
|
|
(21,151 |
) |
|
|
691,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
1,043 |
|
|
|
(72,982 |
) |
|
|
(22,028 |
) |
|
Cash and cash equivalents at beginning of the year |
|
|
10,861 |
|
|
|
83,843 |
|
|
|
105,871 |
|
|
Cash and cash equivalents at end of the year |
|
$ |
11,904 |
|
|
$ |
10,861 |
|
|
$ |
83,843 |
|
See accompanying notes to consolidated financial statements.
54
INLAND REAL ESTATE INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Dollar amounts in thousands)
For the years ended December 31, 2017, 2016 and 2015
|
Supplemental disclosure of cash flow information: |
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
In conjunction with the purchase of investment property, the Company acquired assets and assumed liabilities as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
17,513 |
|
|
$ |
15,128 |
|
|
$ |
163,832 |
|
|
Building and improvements |
|
|
41,793 |
|
|
|
53,849 |
|
|
|
580,061 |
|
|
Acquired in-place lease intangibles |
|
|
6,740 |
|
|
|
12,768 |
|
|
|
98,062 |
|
|
Acquired above market lease intangibles |
|
|
8,645 |
|
|
|
1,080 |
|
|
|
30,524 |
|
|
Acquired below market lease intangibles |
|
|
(4,589 |
) |
|
|
(3,432 |
) |
|
|
(44,359 |
) |
|
Acquired above market ground lease liability |
|
|
— |
|
|
|
— |
|
|
|
(5,169 |
) |
|
Other receivables |
|
|
— |
|
|
|
— |
|
|
|
792 |
|
|
Assumption of mortgage debt at acquisition |
|
|
— |
|
|
|
— |
|
|
|
(58,026 |
) |
|
Non-cash mortgage premium |
|
|
— |
|
|
|
— |
|
|
|
(3,430 |
) |
|
Deferred investment property acquisition obligations |
|
|
— |
|
|
|
— |
|
|
|
(18,211 |
) |
|
Assumed liabilities, net |
|
|
(149 |
) |
|
|
(359 |
) |
|
|
(9,745 |
) |
|
Purchase of investment properties |
|
$ |
69,953 |
|
|
$ |
79,034 |
|
|
$ |
734,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of amounts capitalized |
|
$ |
24,206 |
|
|
$ |
21,087 |
|
|
$ |
9,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions payable |
|
$ |
4,537 |
|
|
$ |
4,488 |
|
|
$ |
4,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued offering costs payable |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
252 |
|
See accompanying notes to consolidated financial statements.
55
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
Inland Real Estate Income Trust, Inc. (the “Company”) was formed on August 24, 2011 to acquire and manage a portfolio of commercial real estate investments located in the United States. The Company has primarily focused on acquiring retail properties. The Company has invested in joint ventures and may continue to invest in additional joint ventures or acquire other real estate assets such as office and medical office buildings, multi-family properties and industrial/distribution and warehouse facilities if its management believes the expected returns from those investments exceed that of retail properties. The Company also may invest in real estate-related equity securities of both publicly traded and private real estate companies, as well as commercial mortgage-backed securities.
The Company entered into a Business Management Agreement with IREIT Business Manager & Advisor, Inc. (the “Business Manager”), an indirect wholly owned subsidiary of Inland Real Estate Investment Corporation (the “Sponsor”), to be the Business Manager to the Company.
At December 31, 2017, the Company owned 59 retail properties, totaling 6,860,923 square feet. The properties are located in 24 states. At December 31, 2017, the portfolio had a weighted average physical occupancy of 93.9% and economic occupancy of 94.8%. Economic occupancy excludes square footage associated with an earnout component.
On January 16, 2018, the Company effected a 1-for-2.5 reverse stock split of its issued and outstanding common stock whereby every 2.5 shares of issued and outstanding common stock were converted into one share of its common stock (the “Reverse Stock Split”). In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), all share information presented has been retroactively adjusted to reflect the Reverse Stock Split.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In the opinion of management, all adjustments necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods are presented. Actual results could differ from those estimates.
Information with respect to square footage and occupancy is unaudited.
Consolidation
The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly owned subsidiaries. Wholly owned subsidiaries generally consist of limited liability companies (“LLCs”). All intercompany balances and transactions have been eliminated in consolidation. Each property is owned by a separate legal entity which maintains its own books and financial records and each entity’s assets are not available to satisfy the liabilities of other affiliated entities.
The fiscal year-end of the Company is December 31.
Acquisitions
Upon acquisition of real estate investment properties, the Company allocates the total purchase price of each property that is accounted for as an asset acquisition based on the relative fair value of the tangible and intangible assets acquired and liabilities assumed based on Level 3 inputs, such as comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions, from a third party appraisal or other market sources. The acquisition date is the date on which the Company obtains control of the real estate investment property and transaction costs are capitalized.
Assets and liabilities acquired typically include land, building and site improvements and identified intangible assets and liabilities, consisting of the value of above market and below market leases and the value of in-place leases. The portion of the purchase price
56
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
allocated to above market lease values are included in acquired lease intangible assets, net and is amortized on a straight-line basis over the term of the related lease as a reduction to rental income. The portion allocated to below market lease values are included in acquired intangible liabilities, net and is amortized as an increase to rental income over the term of the lease including any renewal periods with fixed rate renewals. The portion of the purchase price allocated to acquired in-place lease value is included in acquired lease intangible assets, net and is amortized on a straight-line basis over the acquired leases’ weighted average remaining term.
The Company determines the fair value of the tangible assets consisting of land and buildings by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and buildings. The Company determines the fair value of assumed debt by calculating the net present value of the mortgage payments using interest rates for debt with similar terms and maturities. Differences between the fair value and the stated value is recorded as a discount or premium and amortized over the remaining term using the effective interest method.
Certain of the Company’s properties included earnout components to the purchase price, meaning the Company did not pay a portion of the purchase price of the property at closing, although the Company owns the entire property. The Company is not obligated to settle the contingent portion of the purchase price unless space which was vacant at the time of acquisition is later leased by the seller within the time limits and parameters set forth in the related acquisition agreements. The Company’s policy is to record earnout components when estimable and probable.
In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance that clarified the definition of a business and assists in the evaluation of whether a transaction should be accounted for as an acquisition of an asset or a business combination. The Company early adopted the new guidance and modified its accounting policy effective October 1, 2016. Prior to October 1, 2016, the Company expensed all acquisition expenses as incurred whether or not the acquisition was completed, and assets acquired and liabilities assumed were measured at their fair values rather than at their relative fair values as described above. Additionally, earnouts were recorded as additional purchase price of the related property and as a liability included in deferred investment property acquisition obligations on the accompanying consolidated balance sheets. The amount recorded was based on the Company’s best estimate of the potential future earnout payments at the date of an acquisition. The Company recorded the effect of changes in the underlying liability assumptions in acquisition related costs on the accompanying consolidated statements of operations and comprehensive loss.
Impairment of Investment Properties
The Company assesses the carrying values of its respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Recoverability of the assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. In order to review its assets for recoverability, the Company considers current market conditions, as well as its intent with respect to holding or disposing of the asset. If the Company’s analysis indicates that the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, the Company recognizes an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate property. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third party appraisals, where considered necessary (Level 3 inputs).
The Company estimates the future undiscounted cash flows based on management’s intent as follows: (i) for real estate properties that the Company intends to hold long-term, including land held for development, properties currently under development and operating buildings, recoverability is assessed based on the estimated future net rental income from operating the property and termination value; and (ii) for real estate properties that the Company intends to sell, including land parcels, properties currently under development and operating buildings, recoverability is assessed based on estimated net proceeds, including net rental income during the holding period, from disposition that are estimated based on future net rental income of the property and utilizing expected market capitalization rates.
The use of projected future cash flows is based on assumptions that are consistent with our estimates of future expectations and the strategic plan the Company uses to manage its underlying business. However, assumptions and estimates about future cash flows, including comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions which impact the discounted cash flow approach to determining value are complex and subjective. Changes in economic and operating conditions and the Company’s ultimate investment intent that occur subsequent to the impairment analysis could impact these assumptions and result in future impairment charges of real estate properties.
57
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
During the year ended December 31, 2017, the Company recorded an impairment charge of $8,530 which is included in provision for impairment of investment property on the accompanying consolidated statements of operations and comprehensive loss. During the years ended December 31, 2016 and 2015, the Company incurred no impairment charges.
REIT Status
The Company has qualified and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ended December 31, 2013. As a result, the Company generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income (subject to certain adjustments and excluding any net capital gain) to its stockholders. The Company will monitor the business and transactions that may potentially impact its REIT status. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income.
Cash and Cash Equivalents
The Company considers all demand deposits, money market accounts and all short term investments with a maturity of three months or less, at the date of purchase, to be cash equivalents. The account balance may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions’ non-performance.
Valuation of Accounts and Rents Receivable
The Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability factors taken into consideration are the amounts outstanding and payment history of the tenant, which taken as a whole determines the valuation. Allowances are taken for those balances that the Company deems to be uncollectible, including any amounts relating to straight-line income receivables.
Capitalization and Depreciation
Real estate acquisitions are recorded at cost less accumulated depreciation. Improvement and betterment costs are capitalized, and ordinary repairs and maintenance are expensed as incurred.
Cost capitalization and the estimate of useful lives require judgment and include significant estimates that can and do change. Depreciation expense is computed using the straight-line method. The Company anticipates the estimated useful lives of its assets by class to be generally:
|
Building and other improvements |
|
30 years |
|
Site improvements |
|
5-15 years |
|
Furniture, fixtures and equipment |
|
5-15 years |
|
Tenant improvements |
|
Shorter of the life of the asset or the term of the related lease |
|
Leasing fees |
|
Term of the related lease |
Depreciation expense was approximately $39,497, $35,086 and $21,309 for the years ended December 31, 2017, 2016 and 2015, respectively.
58
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The Company will consolidate the operations of a joint venture if the Company determines that it is either the primary beneficiary of a variable interest entity (VIE) or has substantial influence and control of the entity. In instances where the Company determines that it is not the primary beneficiary of a VIE or the Company does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Company will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Company’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Company’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets.
Debt Issuance Costs
Debt issuance costs are amortized on a straight-line basis, which approximates the effective interest method, over the term, or anticipated repayment date, of the related agreements as a component of interest expense. These costs are reported as a direct deduction to the Company’s outstanding mortgages and credit facility payable. The adoption of Accounting Standards Update (“ASU”) No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt issuance Costs issued by the FASB resulted in the reclassification of $4,467 from deferred expenses, net to mortgages and credit facility payable, net on the consolidated balance sheets as of December 31, 2015.
Fair Value Measurements
The Company has estimated fair value using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition.
The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
|
Level 1 − |
|
Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. |
|
|
|
|
|
Level 2 − |
|
Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
|
|
|
|
|
Level 3 − |
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
The Company’s cash equivalents, accounts receivable and payables and accrued expenses all approximate fair value due to the short term nature of these financial instruments. The Company’s financial instruments measured on a recurring basis include derivative interest rate instruments.
Derivatives
The Company uses derivative instruments, such as interest rate swaps, primarily to manage exposure to interest rate risks inherent in variable rate debt. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. The Company’s interest rate swaps involve the receipt of variable-rate 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. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date. The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedging instruments under the accounting requirements for derivatives and hedging.
59
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The Company commences revenue recognition on its leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of, or controls the physical use of, the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If the Company is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If the Company concludes it is not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded by the Company under the lease are treated as lease incentives which reduce revenue recognized over the term of the lease. In these circumstances, the Company begins revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. The Company considers a number of different factors to evaluate whether it or the lessee is the owner of the tenant improvements for accounting purposes.
Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rent receivable in the accompanying consolidated balance sheets. Due to the impact of the straight-line basis, rental income generally will be greater than the cash collected in the early years and will decrease in the later years of a lease.
Reimbursements from tenants for recoverable real estate tax and operating expenses are accrued as revenue in the period the applicable expenses are incurred. The Company makes certain assumptions and judgments in estimating the reimbursements at the end of each reporting period. The Company does not expect the actual results to materially differ from the estimated reimbursement.
The Company records lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and amounts due are considered collectible. Upon early lease termination, the Company provides for gains or losses related to unrecovered intangibles and other assets.
As a lessor, the Company defers the recognition of contingent rental income, such as percentage rent, until the specified target that triggered the contingent rental income is achieved.
Equity-Based Compensation
The Company has restricted shares and units outstanding at December 31, 2017 and 2016. The Company recognizes expense related to the fair value of equity-based compensation awards as general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss. The Company primarily recognizes expense based on the fair value at the grant date on a straight-line basis over the vesting period representing the requisite service period. See Note 8 - "Equity-Based Compensation" for further information.
Recent Accounting Pronouncements
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. The update, among other things,
|
|
• |
expands hedge accounting for nonfinancial and financial risk components and amends measurement methodologies to more closely align hedge accounting with a company’s risk management activities; |
|
|
• |
decreases the complexity of preparing hedge results through eliminating separate measurement and reporting of hedge ineffectiveness; |
|
|
• |
enhances disclosures and changes presentation of hedge results to align the effects of the hedging instrument and the hedged item; |
|
|
• |
simplifies the assessment of hedge effectiveness. |
60
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The amendment is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the update. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this update. The amended presentation and disclosure guidance is required only prospectively. The Company continues to evaluate ASU No. 2017-12 to determine the impact on its consolidated financial statements and related disclosures.
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new update will require that amounts described as restricted cash and restricted cash equivalents be included in beginning and ending-of-period reconciliation cash shown on the statement of cash flows. The amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. At December 31, 2017, restricted cash of $4,940 was recorded as other assets on the Company’s consolidated balance sheets and the Company does not believe that the adoption of ASU No. 2016-18 will have a material impact on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issues addressed in the new guidance include the cash flow classification of: debt prepayment and debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The standard will be effective for fiscal years beginning after December 15, 2017, for public companies. The Company intends to adopt the new accounting standard by making a policy election to classify distributions received from an equity method investee as operating cash inflows up to its cumulative equity in earnings and any excess as investing inflows. The Company does not believe that ASU No. 2016-15 will have a material impact on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. 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. 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 No. 2016-02 supersedes the previous leases standard, Leases (Topic 840). The Company has identified its lease revenues and non-lease revenues under the guidance. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company expects to adopt the guidance on a modified retrospective basis and upon adoption of the Leases guidance, non-lease components of new, extended or modified leases, including common area maintenance reimbursements, will be accounted for under the Revenue from Contracts with Customers guidance as described below. The Company is also the lessee under a ground lease, which it will be required to recognize right of use asset and a related lease liability on its consolidated balance sheets upon adoption.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, although it will not affect the accounting for rental related revenues. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. The Company anticipates selecting the modified retrospective transition method with a cumulative effect recognized as of the date of adoption and will adopt the new standard effective January 1, 2018, when effective. The Company has evaluated the specific revenue streams that could be most significantly impacted by this ASU and expects that the revenue recognition from these activities and other miscellaneous income will be generally consistent with current recognition methods, and therefore does not expect material changes to the consolidated financial statements as a result of adoption. The Company’s remaining implementation items include calculating the cumulative effect adjustment, if any, to be recorded upon adoption, drafting revised disclosures in accordance with the new standard and implementing changes to internal control policies and procedures, if any. Common area maintenance reimbursements to be impacted by ASU No. 2014-09 will not be addressed until the Company's adoption of ASU No. 2016-02, considering its revisions to accounting for common area maintenance described above.
61
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The Company commenced an initial public “best efforts” offering (the “Offering”) on October 18, 2012, which concluded on October 16, 2015. The Company sold 33,534,022 shares of common stock generating gross proceeds of $834,399 from the Offering. On March 29, 2017, the Company’s board of directors determined an estimated per share net asset value (the “Estimated Per Share NAV”) of the Company’s common stock of $22.63 ($9.05 prior to the Reverse Stock Split). The previously estimated per share net asset value of $22.55 ($9.02 prior to the Reverse Stock Split) was established on April 7, 2016.
The Company provides the following programs to facilitate additional investment in the Company’s shares and to provide limited liquidity for stockholders.
Distribution Reinvestment Plan
On October 19, 2015, the Company registered 25,000,000 shares of common stock to be issued under its distribution reinvestment plan (“DRP”) pursuant to a registration statement on Form S-3D. The Company provides stockholders with the option to purchase additional shares from the Company by automatically reinvesting cash distributions through the DRP, subject to certain share ownership restrictions. The Company does not pay any selling commissions or a marketing contribution and due diligence expense allowance in connection with the DRP. Pursuant to the DRP, the price per share for shares of common stock purchased under the DRP is equal to the estimated value of a share, as determined by the Company’s board of directors and reported by the Company from time to time, until the shares become listed for trading, if a listing occurs, assuming that the DRP has not been terminated or suspended in connection with such listing. On March 30, 2017, the Company reported a new Estimated Per Share NAV of $22.63 ($9.05 prior to the Reverse Stock Split).
Distributions reinvested through the DRP were approximately $27,069, $27,831 and $20,828 for the years ended December 31, 2017, 2016 and 2015, respectively.
Share Repurchase Program
The Company adopted a share repurchase program effective October 18, 2012 which was subsequently amended effective January 1, 2018 to change the processing of repurchase requests from a monthly to a quarterly basis to align with the move to quarterly distributions. Under the amended and restated share repurchase program (“SRP”), the Company is authorized to purchase shares from stockholders who purchased their shares from the Company or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested, if the Company chooses to purchase them. Subject to funds being available, the Company limits the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year, as adjusted by the Reverse Stock Split. Funding for the SRP comes from proceeds the Company receives from the DRP during the same period. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, the one year holding period does not apply. The SRP will immediately terminate if the Company’s shares become listed for trading on a national securities exchange. In addition, the Company’s board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP.
Pursuant to the SRP, the Company may repurchase shares at prices ranging from 92.5% of the “share price,” as defined in the SRP, for stockholders who have owned shares for at least one year to 100% of the “share price” for stockholders who have owned shares for at least four years. For repurchases sought upon a stockholder’s death or qualifying disability, the Company may repurchase shares at a price equal to 100% of the “share price.” As used in the SRP, “share price” means the lesser of (1) the offering price of the Company’s shares in the Offering (unless the shares were purchased at a discount from that price, and then that purchase price), as adjusted by the Reverse Stock Split, reduced by any distributions of net sale proceeds that the Company designates as constituting a return of capital; or (2) the most recently disclosed estimated value per share.
Repurchases through the SRP were approximately $21,066, $9,724 and $3,810 for the years ended December 31, 2017, 2016 and 2015, respectively. At December 31, 2017 and 2016, the liability related to the SRP was $2,530 and $1,448, respectively, recorded in other liabilities on the Company’s consolidated balance sheets.
62
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
2017 Acquisitions
During the year ended December 31, 2017, the Company acquired, through its wholly owned subsidiaries, the three properties listed below from unaffiliated third parties. The acquisitions were financed with proceeds from the Company’s credit facility (the “Credit Facility”).
|
Date Acquired |
|
Property Name |
|
Location |
|
Property Type |
|
Square Footage |
|
|
Purchase Price (a) |
|
||
|
1st Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2017 |
|
Wilson Marketplace (b) |
|
Wilson, NC |
|
Multi-Tenant Retail |
|
|
311,030 |
|
|
$ |
40,783 |
|
|
2nd Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/3/2017 |
|
Pentucket Shopping Center (b) |
|
Plaistow, NH |
|
Multi-Tenant Retail |
|
|
198,469 |
|
|
|
24,100 |
|
|
3rd Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/14/2017 |
|
Coastal North Town Center - Phase II |
|
Myrtle Beach, SC |
|
Retail |
|
|
6,588 |
|
|
|
3,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
516,087 |
|
|
$ |
68,599 |
|
|
(a) |
Contractual purchase price excluding closing credits. |
|
(b) |
Subsequent to the acquisition date, first mortgages were placed on the properties. |
The above acquisitions were accounted for as asset acquisitions. For the year ended December 31, 2017, the Company incurred $2,213 of total acquisition costs and fees, $1,459 of which are capitalized as the acquisition of net investment properties in the accompanying consolidated balance sheets. An adjustment to the deferred investment property acquisition obligation of $574 and $180 of acquisition and dead deal costs are included in acquisition related costs in the accompanying consolidated statements of operations and comprehensive loss.
2016 Acquisitions
During the year ended December 31, 2016, the Company acquired, through its wholly owned subsidiaries, the two properties listed below and financed Coastal North Town Center by obtaining a mortgage loan in the amount of $43,680.
|
Date Acquired |
|
Property Name |
|
Location |
|
Property Type |
|
Square Footage |
|
|
Purchase Price |
|
||
|
2nd Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/22/16 |
|
Coastal North Town Center |
|
Myrtle Beach, SC |
|
Multi-Tenant Retail |
|
|
304,662 |
|
|
$ |
72,811 |
|
|
4/22/16 |
|
Oquirrh Mountain Marketplace Phase II |
|
South Jordan, UT |
|
Multi-Tenant Retail |
|
|
10,150 |
|
|
|
4,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
314,812 |
|
|
$ |
77,140 |
|
For the year ended December 31, 2016, the Company recorded a reduction in deferred investment property acquisition obligation of $2,066, net of acquisition costs of $510 in acquisition related costs in the consolidated statements of operations and comprehensive loss. The Company incurred $13,903 for the year ended December 31, 2015, of acquisition, dead deal and transaction related costs that were related to both closed and potential transactions and deferred obligation adjustments. These costs include third party due diligence costs such as appraisals, environmental studies, and legal fees as well as acquisition fees and time and travel expense reimbursements to the Sponsor and its affiliates. For the year ended December 31, 2015, the Business Manager permanently waived acquisition fees of $2,510. No fees were waived for 2017 or 2016.
For properties acquired during the year ended December 31, 2017, the Company recorded total income of $5,202 and property net income of $325, which excludes expensed acquisition related costs. For properties acquired during the year ended December 31, 2016, the Company recorded total income of $4,218 and property net income of $269, which excludes expensed acquisition related costs.
63
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The following table presents certain additional information regarding the Company’s acquisitions during the years ended December 31, 2017 and 2016. The amounts recognized for major assets acquired and liabilities assumed as of the acquisition date are as follows:
|
|
|
For the Year Ended December 31, |
|
|||||
|
|
|
2017 |
|
|
2016 (a) |
|
||
|
Land |
|
$ |
17,513 |
|
|
$ |
15,128 |
|
|
Building and improvements |
|
|
41,793 |
|
|
|
53,849 |
|
|
Acquired lease intangible assets, net |
|
|
15,385 |
|
|
|
13,848 |
|
|
Acquired intangible liabilities, net |
|
|
(4,589 |
) |
|
|
(3,432 |
) |
|
Fair value adjustment related to the assumption of mortgages payable |
|
|
— |
|
|
|
— |
|
|
Deferred investment property acquisition obligations |
|
|
— |
|
|
|
— |
|
|
Assumed liabilities, net |
|
|
(149 |
) |
|
|
(359 |
) |
|
Total |
|
$ |
69,953 |
|
|
$ |
79,034 |
|
|
(a) |
Total for the year ended December 31, 2016 includes $1,720 for 4,200 square feet acquired at Oquirrh Mountain Marketplace and $533 for 1,766 square feet at Park Avenue Shopping Center. |
NOTE 5 – INVESTMENT IN UNCONSOLIDATED ENTITIES
The following table summarizes the Company’s unconsolidated joint ventures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in unconsolidated entities |
|
|||||
|
Entity |
|
Company's Profit/Loss Allocation at December 31, 2017 |
|
|
Remaining Commitment |
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
||||
|
Mainstreet Texas Development Fund, LLC ("Mainstreet JV") (a) |
|
|
83 |
% |
|
$ |
1,783 |
|
|
$ |
7,125 |
|
|
$ |
— |
|
|
Oak Property Casualty, LLC ("Captive") (b) |
|
n/a |
|
|
|
— |
|
|
|
— |
|
|
|
126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
7,125 |
|
|
$ |
126 |
|
|
(a) |
In August 2017, the Company, through a wholly owned taxable REIT subsidiary, made an equity commitment to Mainstreet JV in order to develop, construct, lease, finance and sell parcels of land and related building improvements including personal property which are to be operated as rapid recovery healthcare facilities located in Beaumont, Amarillo and Temple, Texas. The investment balance includes capitalized acquisition, interest and legal costs of $157. |
|
(b) |
The Company was a member of a limited liability company formed as an insurance association captive, which was owned by the Company, IRC Retail Centers LLC, InvenTrust Properties Corp. and Retail Properties of America, Inc. See Note 13 – “Transactions with Related Parties.” |
64
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
NOTE 6 – ACQUIRED INTANGIBLE ASSETS AND LIABILITIES
The following table summarizes the Company’s identified intangible assets and liabilities as of December 31, 2017 and 2016:
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
||
|
Intangible assets: |
|
|
|
|
|
|
|
|
|
Acquired in-place lease value |
|
$ |
165,182 |
|
|
$ |
159,679 |
|
|
Acquired above market lease value |
|
|
45,824 |
|
|
|
37,179 |
|
|
Accumulated amortization |
|
|
(72,348 |
) |
|
|
(46,750 |
) |
|
Acquired lease intangibles, net |
|
$ |
138,658 |
|
|
$ |
150,108 |
|
|
Intangible liabilities: |
|
|
|
|
|
|
|
|
|
Acquired below market lease value |
|
$ |
71,551 |
|
|
$ |
66,962 |
|
|
Above market ground lease |
|
|
5,169 |
|
|
|
5,169 |
|
|
Accumulated amortization |
|
|
(14,450 |
) |
|
|
(8,657 |
) |
|
Acquired below market lease intangibles, net |
|
$ |
62,270 |
|
|
$ |
63,474 |
|
As of December 31, 2017, the weighted average amortization periods for acquired in-place lease, above market lease intangibles, below market lease intangibles and above market ground lease are 10, 14, 19 and 55 years, respectively.
The portion of the purchase price allocated to acquired above market lease value and acquired below market lease value is amortized on a straight-line basis over the term of the related lease as an adjustment to rental income. For below market lease values, the amortization period includes any renewal periods with fixed rate renewals. The acquired above market ground lease is amortized on a straight-line basis as an adjustment to property operating expense over the term of the lease and includes renewal periods. The portion of the purchase price allocated to acquired in-place lease value is amortized on a straight-line basis over the acquired leases’ weighted average remaining term.
Amortization pertaining to acquired in-place lease value, above market ground lease, above market lease value and below market lease value is summarized below:
|
Amortization recorded as amortization expense: |
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Acquired in-place lease value |
|
$ |
22,104 |
|
|
$ |
24,174 |
|
|
$ |
13,170 |
|
|
Amortization recorded as a reduction to property operating expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Above market ground lease |
|
$ |
94 |
|
|
$ |
94 |
|
|
$ |
24 |
|
|
Amortization recorded as a (reduction) increase to rental income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired above market leases |
|
$ |
(4,379 |
) |
|
$ |
(4,341 |
) |
|
$ |
(2,334 |
) |
|
Acquired below market leases |
|
|
5,700 |
|
|
|
5,059 |
|
|
|
2,986 |
|
|
Net rental income increase |
|
$ |
1,321 |
|
|
$ |
718 |
|
|
$ |
652 |
|
65
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
Estimated amortization of the respective intangible lease assets and liabilities as of December 31, 2017 for each of the five succeeding years and thereafter is as follows:
|
|
|
Acquired In-Place Leases |
|
|
Above Market Leases |
|
|
Below Market Leases |
|
|
Above Market Ground Lease |
|
||||
|
2018 |
|
$ |
18,995 |
|
|
$ |
3,794 |
|
|
$ |
(4,470 |
) |
|
$ |
(94 |
) |
|
2019 |
|
|
17,031 |
|
|
|
3,430 |
|
|
|
(4,325 |
) |
|
|
(94 |
) |
|
2020 |
|
|
14,012 |
|
|
|
3,091 |
|
|
|
(4,104 |
) |
|
|
(94 |
) |
|
2021 |
|
|
11,475 |
|
|
|
3,021 |
|
|
|
(3,917 |
) |
|
|
(94 |
) |
|
2022 |
|
|
8,830 |
|
|
|
2,715 |
|
|
|
(3,657 |
) |
|
|
(94 |
) |
|
Thereafter |
|
|
33,955 |
|
|
|
18,309 |
|
|
|
(36,838 |
) |
|
|
(4,489 |
) |
|
Total |
|
$ |
104,298 |
|
|
$ |
34,360 |
|
|
$ |
(57,311 |
) |
|
$ |
(4,959 |
) |
NOTE 7 – DEBT AND DERIVATIVE INSTRUMENTS
As of December 31, 2017 and 2016, the Company had the following mortgages and credit facility payable:
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
||||||||||
|
Type of Debt |
|
Principal Amount |
|
|
Weighted Average Interest Rate |
|
|
Principal Amount |
|
|
Weighted Average Interest Rate |
|
||||
|
Fixed rate mortgages payable |
|
$ |
171,851 |
|
|
|
4.25 |
% |
|
$ |
178,345 |
|
|
|
4.31 |
% |
|
Variable rate mortgages payable with swap agreements |
|
|
383,517 |
|
|
|
3.49 |
% |
|
|
354,488 |
|
|
|
3.42 |
% |
|
Variable rate mortgages payable |
|
|
54,153 |
|
|
|
3.26 |
% |
|
|
44,003 |
|
|
|
2.50 |
% |
|
Mortgages payable |
|
$ |
609,521 |
|
|
|
3.69 |
% |
|
$ |
576,836 |
|
|
|
3.62 |
% |
|
Credit facility payable |
|
$ |
83,800 |
|
|
|
3.21 |
% |
|
$ |
31,000 |
|
|
|
2.26 |
% |
|
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps |
|
$ |
693,321 |
|
|
|
3.63 |
% |
|
$ |
607,836 |
|
|
|
3.55 |
% |
|
Add: Unamortized mortgage premiums |
|
|
2,316 |
|
|
|
|
|
|
|
3,080 |
|
|
|
|
|
|
Less: Unamortized debt issuance costs |
|
|
(4,172 |
) |
|
|
|
|
|
|
(4,891 |
) |
|
|
|
|
|
Total debt |
|
$ |
691,465 |
|
|
|
|
|
|
$ |
606,025 |
|
|
|
|
|
The Company’s indebtedness bore interest at a weighted average interest rate of 3.63% per annum at December 31, 2017, which includes the effects of interest rate swaps. The Company estimates the fair value of its total debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by the Company’s lenders using Level 3 inputs. The carrying value of the Company’s debt excluding mortgage premium and unamortized debt issuance costs was $693,321 and $607,836 as of December 31, 2017 and 2016, respectively, and its estimated fair value was $684,621 and $595,404 as of December 31, 2017 and 2016, respectively.
66
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
As of December 31, 2017, scheduled principal payments and maturities on the Company’s debt were as follows:
|
|
|
December 31, 2017 |
|
|||||||||||||
|
Scheduled Principal Payments and Maturities by Year: |
|
Scheduled Principal Payments |
|
|
Maturities of Mortgage Loans |
|
|
Maturity of Credit Facility |
|
|
Total |
|
||||
|
2018 |
|
$ |
221 |
|
|
$ |
15,260 |
|
|
$ |
— |
|
|
$ |
15,481 |
|
|
2019 |
|
|
215 |
|
|
|
152,450 |
|
|
|
83,800 |
|
|
|
236,465 |
|
|
2020 |
|
|
897 |
|
|
|
— |
|
|
|
— |
|
|
|
897 |
|
|
2021 |
|
|
1,531 |
|
|
|
82,740 |
|
|
|
— |
|
|
|
84,271 |
|
|
2022 |
|
|
615 |
|
|
|
126,017 |
|
|
|
— |
|
|
|
126,632 |
|
|
Thereafter |
|
|
962 |
|
|
|
228,613 |
|
|
|
— |
|
|
|
229,575 |
|
|
Total |
|
$ |
4,441 |
|
|
$ |
605,080 |
|
|
$ |
83,800 |
|
|
$ |
693,321 |
|
Credit Facility Payable
The Company’s Credit Facility in the amount of $110,000 has an accordion feature that allows for an increase in available borrowings up to $400,000, subject to certain conditions. The Credit Facility matures on September 30, 2019 and the Company has a one year extension option which it may exercise as long as certain conditions are met.
At December 31, 2017, the interest rate on the Credit Facility was 3.21%. As of December 31, 2017, the Company had $26,200 available for borrowing under the Credit Facility.
The Credit Facility requires compliance with certain covenants, as amended, including a minimum tangible net worth requirement, a distribution limitation, restrictions on indebtedness and investment restrictions, as defined. It also contains customary default provisions including the failure to comply with the Company's covenants and the failure to pay when amounts outstanding under the Credit Facility become due. The Company is in compliance with all financial covenants related to the Credit Facility.
Mortgages Payable
The mortgage loans require compliance with certain covenants, such as debt service ratios, investment restrictions and distribution limitations. As of December 31, 2017, the Company was current on all of the payments and in compliance with all financial covenants. All of the Company’s mortgage loans are secured by first mortgages on the respective real estate assets. As of December 31, 2017, the weighted average years to maturity for the Company’s mortgages payable was approximately 4.2 years.
Interest Rate Swap Agreements
The Company entered into interest rate swaps to fix certain of its floating LIBOR based debt under variable rate loans to a fixed rate to manage its risk exposure to interest rate fluctuations. The Company will generally match the maturity of the underlying variable rate debt with the maturity date on the interest swap. See Note 15 - "Fair Value Measurements" for further information.
67
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The following table summarizes the Company’s interest rate swap contracts outstanding as of December 31, 2017.
|
Date Entered |
|
Effective Date |
|
Maturity Date |
|
Pay Fixed Rate (a) |
|
|
Notional Amount |
|
|
Fair Value at December 31, 2017 |
|
|||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 27, 2014 |
|
July 1, 2014 |
|
July 1, 2019 |
|
|
1.85 |
% |
|
$ |
24,352 |
|
|
$ |
9 |
|
|
February 11, 2015 |
|
March 2, 2015 |
|
March 1, 2022 |
|
|
2.02 |
% |
|
|
6,114 |
|
|
|
19 |
|
|
April 7, 2015 |
|
April 7, 2015 |
|
April 7, 2022 |
|
|
1.74 |
% |
|
|
49,400 |
|
|
|
723 |
|
|
July 8, 2015 |
|
August 1, 2015 |
|
May 22, 2019 |
|
|
1.43 |
% |
|
|
1,426 |
|
|
|
8 |
|
|
September 17, 2015 |
|
September 17, 2015 |
|
September 17, 2022 |
|
|
1.90 |
% |
|
|
13,700 |
|
|
|
137 |
|
|
October 2, 2015 |
|
November 1, 2015 |
|
November 1, 2022 |
|
|
1.79 |
% |
|
|
13,100 |
|
|
|
201 |
|
|
January 25, 2016 |
|
February 1, 2016 |
|
February 1, 2021 |
|
|
1.40 |
% |
|
|
38,000 |
|
|
|
733 |
|
|
June 7, 2016 |
|
July 1, 2016 |
|
July 1, 2023 |
|
|
1.42 |
% |
|
|
43,680 |
|
|
|
1,648 |
|
|
July 21, 2016 |
|
August 1, 2016 |
|
August 1, 2023 |
|
|
1.30 |
% |
|
|
47,550 |
|
|
|
2,147 |
|
|
August 29, 2016 |
|
October 21, 2016 |
|
December 15, 2019 |
|
|
1.07 |
% |
|
|
10,836 |
|
|
|
184 |
|
|
April 27, 2017 |
|
April 26, 2017 |
|
April 26, 2022 |
|
|
1.91 |
% |
|
|
24,480 |
|
|
|
202 |
|
|
June 5, 2017 |
|
May 31, 2017 |
|
May 15, 2022 |
|
|
1.90 |
% |
|
|
14,700 |
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
287,338 |
|
|
$ |
6,136 |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, 2014 |
|
March 1, 2015 |
|
March 28, 2019 |
|
|
2.22 |
% |
|
$ |
5,525 |
|
|
$ |
(27 |
) |
|
May 8, 2014 |
|
May 5, 2015 |
|
May 7, 2019 |
|
|
2.10 |
% |
|
|
14,200 |
|
|
|
(49 |
) |
|
May 23, 2014 |
|
May 1, 2015 |
|
May 22, 2019 |
|
|
2.00 |
% |
|
|
8,484 |
|
|
|
(17 |
) |
|
June 6, 2014 |
|
June 1, 2015 |
|
May 8, 2019 |
|
|
2.15 |
% |
|
|
11,684 |
|
|
|
(48 |
) |
|
June 26, 2014 |
|
July 5, 2015 |
|
July 5, 2019 |
|
|
2.11 |
% |
|
|
20,725 |
|
|
|
(74 |
) |
|
July 31, 2014 |
|
July 31, 2014 |
|
July 31, 2019 |
|
|
1.94 |
% |
|
|
9,561 |
|
|
|
(8 |
) |
|
December 23, 2015 |
|
December 23, 2015 |
|
January 2, 2026 |
|
|
2.30 |
% |
|
|
26,000 |
|
|
|
(117 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
96,179 |
|
|
$ |
(340 |
) |
|
(a) |
Receive floating rate index based upon one month LIBOR. At December 31, 2017, the one month LIBOR equaled 1.56%. |
For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the unrealized gain or loss on the derivative is reported as a component of comprehensive income (loss). The ineffective portion of the change in fair value, if any, is recognized directly in earnings. The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive loss for the years ended December 31, 2017, 2016 and 2015.
|
|
|
Year Ended December 31, |
|
|||||||||
|
Derivatives in Cash Flow Hedging Relationships: |
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Effective portion of derivatives |
|
$ |
1,043 |
|
|
$ |
1,861 |
|
|
$ |
(4,612 |
) |
|
Reclassification adjustment for amounts included in net gain or loss (effective portion) |
|
$ |
2,405 |
|
|
$ |
4,038 |
|
|
$ |
2,546 |
|
|
Ineffective portion of derivatives |
|
$ |
7 |
|
|
$ |
233 |
|
|
$ |
365 |
|
The amount that is expected to be reclassified from accumulated other comprehensive income into income in the next twelve months is approximately ($124).
NOTE 8 – EQUITY-BASED COMPENSATION
Under the Company’s Employee and Director Restricted Share Plan (“RSP”), restricted shares and restricted share units generally vest over a one to three year vesting period from the date of the grant, subject to the specific terms of the grant. On June 13, 2017, we issued 1,326 restricted shares and 442 restricted share units to our independent directors pursuant to the automatic grant provisions of the RSP, which become vested in equal installments of 33-1/3% on each of the first three anniversaries of June 13, 2017, subject to
68
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
certain exceptions. On October 2, 2017, we issued 331 restricted shares and 110 restricted share units to our independent directors pursuant to the RSP, which become vested in equal installments of 33-1/3% on each of the first three anniversaries of October 2, 2017, subject to certain exceptions. Each restricted share and restricted share unit entitle the holder to receive one common share when it vests. Restricted shares and restricted share units are included in common stock outstanding on the date of vesting. The grant-date value of the restricted shares and restricted share units is amortized over the vesting period representing the requisite service period. Compensation expense associated with the restricted shares and restricted share units issued to the non-employee directors was $33 and $14, in the aggregate, for the year ended December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, the Company had $44 and $26, respectively, of unrecognized compensation expense related to the unvested restricted shares and restricted share units, in the aggregate. The weighted average remaining period that compensation expense related to unvested restricted shares and restricted share units will be recognized is 1.5 years.
A summary table of the status of the restricted shares and restricted share units is presented below:
|
|
|
Restricted Shares |
|
|
Restricted Share Units |
|
|
Weighted Average Grant Date Fair Value |
|
|
Aggregate Intrinsic Value |
|
||||
|
Outstanding at December 31, 2015 |
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Granted |
|
|
1,330 |
|
|
|
460 |
|
|
|
40 |
|
|
|
40 |
|
|
Vested |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Converted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Outstanding at December 31, 2016 |
|
|
1,330 |
|
|
|
460 |
|
|
|
40 |
|
|
|
40 |
|
|
Granted |
|
|
1,657 |
|
|
|
600 |
|
|
|
51 |
|
|
|
51 |
|
|
Vested |
|
|
(444 |
) |
|
|
(156 |
) |
|
|
(13 |
) |
|
|
(13 |
) |
|
Converted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Outstanding at December 31, 2017 |
|
|
2,543 |
|
|
|
904 |
|
|
$ |
78 |
|
|
$ |
78 |
|
NOTE 9 – INCOME TAX AND DISTRIBUTIONS
The Company paid distributions based on daily record dates, payable in arrears the following month, equal to a daily amount of $0.00410959 per share, based upon a 365-day period for 2017 and 2015. The Company paid distributions based on daily record dates, payable in arrears the following month, equal to a daily amount of $0.00409836 per share, based upon a 366-day period for 2016. The table below presents the distributions paid and declared for the years ended December 31, 2017, 2016 and 2015.
|
|
|
December 31, |
|
|||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Distributions paid |
|
$ |
53,315 |
|
|
$ |
52,358 |
|
|
$ |
42,537 |
|
|
Distributions declared |
|
$ |
53,364 |
|
|
$ |
52,449 |
|
|
$ |
44,908 |
|
For federal income tax purposes, distributions may consist of ordinary dividend income, qualified dividend income, non-taxable return of capital, capital gains or a combination thereof. Distributions to the extent of the Company’s current and accumulated earnings and profits for federal income tax purposes are taxable to the recipient as either ordinary dividend income or, if so declared by the Company, qualified dividend income or capital gain dividends. Distributions in excess of these earnings and profits (calculated for income tax purposes) constitute a non-taxable return of capital rather than ordinary dividend income or a capital gain distribution and reduce the recipient’s tax basis in the shares to the extent thereof. Distributions in excess of earnings and profits that reduce a recipient’s tax basis in the shares have the effect of deferring taxation of the amount of the distribution until the sale of the stockholder’s shares. If the recipient's tax basis is reduced to zero, distributions in excess of the aforementioned earnings and profits (calculated for income tax purposes) constitute taxable gain.
In order to maintain the Company’s status as a REIT, the Company must annually distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to its stockholders. For the years ended December 31, 2017, 2016 and 2015, the Company’s taxable income was $10,045 (unaudited), $9,890 (unaudited) and $13,123 (unaudited), respectively.
69
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The following table sets forth the taxability of distributions on common shares, on a per share basis, paid in 2017, 2016 and 2015:
|
|
|
2017 |
|
|
2016 |
|
|
2015 (a) |
|
|||
|
Ordinary income |
|
$ |
0.29 |
|
|
$ |
0.29 |
|
|
$ |
0.50 |
|
|
Nontaxable return of capital |
|
$ |
1.21 |
|
|
$ |
1.21 |
|
|
$ |
1.18 |
|
|
(a) |
On February 19, 2015, the Company paid an aggregate special distribution of $3,283 to stockholders of record as of January 30, 2015. |
NOTE 10 – EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share (“EPS”) are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (the “common shares”). Diluted EPS is computed by dividing net income (loss) by the common shares plus common share equivalents. The Company excludes antidilutive restricted shares and units from the calculation of weighted-average shares for diluted EPS. As a result of a net loss for the year ended December 31, 2017 and 2016, 1,507 shares and 1,214 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive. As of December 31, 2015, the Company did not have any dilutive common share equivalents outstanding.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
The acquisition of certain of the Company’s properties included an earnout component to the purchase price that was recorded as a deferred investment property acquisition obligation (“Earnout liability”). The maximum potential earnout payment was $2,040 at December 31, 2017.
The table below presents the change in the Company’s Earnout liability for the years ended December 31, 2017 and 2016.
|
|
|
December 31, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Earnout liability-beginning of period |
|
$ |
6,856 |
|
|
$ |
18,871 |
|
|
Increases: |
|
|
|
|
|
|
|
|
|
Acquisitions |
|
|
— |
|
|
|
— |
|
|
Amortization expense |
|
|
35 |
|
|
|
531 |
|
|
Decreases: |
|
|
|
|
|
|
|
|
|
Earnout payments |
|
|
(6,415 |
) |
|
|
(9,067 |
) |
|
Other: |
|
|
|
|
|
|
|
|
|
Adjustments to acquisition related costs |
|
|
574 |
|
|
|
(3,479 |
) |
|
Earnout liability – end of period |
|
$ |
1,050 |
|
|
$ |
6,856 |
|
The Company may be subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the consolidated financial statements of the Company.
In conjunction with its equity investment in the Mainstreet JV, the Company also agreed to provide subsidiaries of the Mainstreet JV mezzanine loans, in the aggregate amount of approximately $5,400. The loan term is for 48 months. The Company will earn interest at a rate of 14.5% per annum and will receive monthly interest payments based on a 10% pay rate. The remaining unpaid interest will be due at maturity or upon certain defined events. The mezzanine loans are guaranteed by one of the other members of the joint venture. The borrowers may draw on the mezzanine loans from time to time in connection with the construction of the rapid recovery healthcare facilities and are not expected to draw on the mezzanine loans until such time as the Company has fully funded its equity commitment to the Mainstreet JV. At December 31, 2017, the Company has not loaned any funds related to the mezzanine loans.
70
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
The Company has one reportable segment, retail real estate, as defined by U.S. GAAP for the years ended December 31, 2017, 2016 and 2015.
NOTE 13 – TRANSACTIONS WITH RELATED PARTIES
The Company was a member of a limited liability company formed as an insurance association captive, which was owned by the Company, IRC Retail Centers LLC, InvenTrust Properties Corp. and Retail Properties of America, Inc. The Company recorded its investment in investment in unconsolidated entities in the accompanying consolidated balance sheets. The Company’s share of net income from its investment was based on the ratio of each member’s premium contribution to the venture. The Company received its original capital investment of $100 and was allocated income of $21, income of $252 and a loss of $118 for the years ended December 31, 2017, 2016 and 2015, respectively. The Captive terminated its operations in March 2016 and dissolved in the fourth quarter of 2017 after all regulatory reports were filed. However, there is no assurance the Company will not be liable for any additional proportional costs associated with the termination of the Captive which have not been previously identified and paid.
The Company owns 1,000 shares of common stock in The Inland Real Estate Group of Companies, Inc. with a recorded value of $1 at December 31, 2017, 2016 and 2015. This amount is included in other assets in the accompanying consolidated balance sheets.
The following table summarizes the Company’s related party transactions for the years ended December 31, 2017, 2016 and 2015. Certain compensation and fees payable to the Business Manager for services to be provided to the Company are limited to maximum amounts.
|
|
|
|
|
Year ended December 31, |
|
|
Unpaid amounts as of |
|
||||||||||||||
|
|
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|||||
|
General and administrative reimbursements |
|
(a) |
|
$ |
1,608 |
|
|
$ |
1,975 |
|
|
$ |
1,367 |
|
|
$ |
203 |
|
|
$ |
274 |
|
|
Affiliate share purchase discounts |
|
(b) |
|
|
— |
|
|
|
— |
|
|
|
28 |
|
|
|
— |
|
|
|
— |
|
|
Total general and administrative expenses |
|
|
|
$ |
1,608 |
|
|
$ |
1,975 |
|
|
$ |
1,395 |
|
|
$ |
203 |
|
|
$ |
274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related costs |
|
|
|
$ |
274 |
|
|
$ |
409 |
|
|
$ |
1,388 |
|
|
$ |
— |
|
|
$ |
88 |
|
|
Acquisition fees |
|
|
|
|
1,266 |
|
|
|
1,327 |
|
|
|
9,580 |
|
|
|
51 |
|
|
|
— |
|
|
Total acquisition costs and fees |
|
(c) |
|
$ |
1,540 |
|
|
$ |
1,736 |
|
|
$ |
10,968 |
|
|
$ |
51 |
|
|
$ |
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate management fees |
|
|
|
$ |
4,800 |
|
|
$ |
4,473 |
|
|
$ |
2,762 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Construction management fees |
|
|
|
|
113 |
|
|
|
121 |
|
|
|
135 |
|
|
|
35 |
|
|
|
53 |
|
|
Leasing fees |
|
|
|
|
214 |
|
|
|
168 |
|
|
|
40 |
|
|
|
51 |
|
|
|
89 |
|
|
Total real estate management related costs |
|
(d) |
|
$ |
5,127 |
|
|
$ |
4,762 |
|
|
$ |
2,937 |
|
|
$ |
86 |
|
|
$ |
142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering costs |
|
(e) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
41,180 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Business management fees |
|
(f) |
|
$ |
9,196 |
|
|
$ |
8,580 |
|
|
$ |
5,501 |
|
|
$ |
2,325 |
|
|
$ |
2,159 |
|
|
Sponsor contribution |
|
(g) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,283 |
|
|
$ |
— |
|
|
$ |
— |
|
|
(a) |
The Business Manager and its related parties are entitled to reimbursement for certain general and administrative expenses incurred by the Business Manager and its related parties relating to the Company’s administration. Such costs are included in general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. |
|
(b) |
The Company established a discount stock purchase policy for related parties and related parties of the Business Manager that enabled the related parties to purchase shares of common stock at $22.50 per share in the Offering. The Company sold 11,252 shares to related parties during the year ended December 31, 2015. |
71
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
|
(d) |
For each property that is managed by Inland Commercial Real Estate Services LLC (the “Real Estate Manager”) (and its predecessor), the Company pays a monthly real estate management fee of up to 1.9% of the gross income from any single-tenant, net-leased property, and up to 3.9% of the gross income from any other property type. The Real Estate Manager determines, in its sole discretion, the amount of the fee with respect to a particular property, subject to the limitations. For each property that is managed directly by the Real Estate Manager or its affiliates, the Company pays the Real Estate Manager a separate leasing fee. Further, in the event that the Company engages its Real Estate Manager to provide construction management services for a property, the Company pays a separate construction management fee. Leasing fees are included in deferred costs, net and construction management fees are included in building and other improvements in the accompanying consolidated balance sheets. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses and benefits of persons performing services for the Real Estate Manager and its affiliates except for the salaries, bonuses and benefits of persons who also serve as an executive officer of the Real Estate Manager or the Company. Real estate management fees and reimbursable expenses are included in property operating expenses in the accompanying consolidated statements of operations and comprehensive loss. |
|
(e) |
A related party of the Business Manager received selling commissions equal to 7.0% of the sale price for each share sold and a marketing contribution equal to 3.0% of the gross offering proceeds from shares sold in the Offering, the majority of which was re-allowed (paid) to third party soliciting dealers. The Company also reimbursed a related party of the Business Manager and the third party soliciting dealers for bona fide, out-of-pocket itemized and detailed due diligence expenses in amounts up to 0.5% of the gross offering proceeds. The Company reimbursed the Sponsor, its affiliates and third parties for costs and other expenses of the Offering that they paid on the Company’s behalf, in an amount not to exceed 1.5% of the gross offering proceeds from shares sold in the Offering. The Company does not pay selling commissions or the marketing contribution or reimburse issuer costs in connection with shares of common stock issued through the DRP. Offering costs are offset against the stockholders’ equity accounts. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. |
|
(f) |
The Company pays the Business Manager an annual business management fee equal to 0.65% of its “average invested assets”. The fee is payable quarterly in an amount equal to 0.1625% of its average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities and consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter. |
|
(g) |
During the year ended December 31, 2015, the Sponsor contributed $3,283 to the Company. The Sponsor has not received, and will not receive, any additional shares of the Company’s common stock for making this contribution. There is no assurance that the Sponsor will continue to contribute any additional monies. |
72
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
Minimum lease payments to be received under operating leases including ground leases, as of December 31, 2017 for the years indicated, assuming no expiring leases are renewed, are as follows:
|
|
|
Minimum Lease Payments |
|
|
|
2018 |
|
$ |
92,365 |
|
|
2019 |
|
|
85,756 |
|
|
2020 |
|
|
79,083 |
|
|
2021 |
|
|
73,330 |
|
|
2022 |
|
|
63,477 |
|
|
Thereafter |
|
|
236,458 |
|
|
Total |
|
$ |
630,469 |
|
The remaining lease terms range from less than one year to 19 years. Most of the revenue from the Company’s properties consists of rents received under long-term operating leases. Most leases require the tenant to pay fixed base rent paid monthly in advance, and to reimburse the Company for the tenant’s pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the Company and recoverable under the terms of the lease. Under these leases, the Company pays all expenses and is reimbursed by the tenant for the tenant’s pro rata share of recoverable expenses paid.
Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the consolidated statements of operations and comprehensive loss. Under leases where all expenses are paid by the Company, subject to reimbursement by the tenant, the expenses are included within property operating expenses and reimbursements are included in tenant recovery income on the consolidated statements of operations and comprehensive loss.
NOTE 15 – FAIR VALUE MEASUREMENTS
Fair Value Hierarchy
The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
|
Level 1 − |
|
Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. |
|
|
|
|
|
Level 2 − |
|
Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
|
|
|
|
|
Level 3 − |
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes.
Recurring Fair Value Measurements
For assets and liabilities measured at fair value on a recurring basis, the table below presents the fair value of the Company’s cash flow hedges as well as their classification on the consolidated balance sheets as of December 31, 2017 and 2016, respectively.
73
INLAND REAL ESTATE INCOME TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017
(Dollar amounts in thousands, except per share amounts)
|
|
Fair Value |
|
||||||||||||||
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements - Other assets |
|
$ |
— |
|
|
$ |
6,136 |
|
|
$ |
— |
|
|
$ |
6,136 |
|
|
Interest rate swap agreements - Other liabilities |
|
$ |
— |
|
|
$ |
340 |
|
|
$ |
— |
|
|
$ |
340 |
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap agreements - Other assets |
|
$ |
— |
|
|
$ |
4,250 |
|
|
$ |
— |
|
|
$ |
4,250 |
|
|
Interest rate swap agreements - Other liabilities |
|
$ |
— |
|
|
$ |
1,909 |
|
|
$ |
— |
|
|
$ |
1,909 |
|
The fair value of derivative instruments was estimated based on data observed in the forward yield curve which is widely observed in the marketplace. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the counterparty's nonperformance risk in the fair value measurements which utilize Level 3 inputs, such as estimates of current credit spreads. The Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative interest rate swap agreements and therefore has classified these in Level 2 of the hierarchy.
Non-recurring Fair Value Measurements
The table below presents activity for the Company’s assets measured at fair value on a non-recurring basis. The Company recognized an impairment charge to reflect an investment at its estimated fair value for the year ended December 31, 2017, which is included in provision for impairment of investment property on the accompanying consolidated statements of operations and comprehensive loss. During the years ended December 31, 2016 and 2015, the Company incurred no impairment charges.
|
|
|
Fair Value |
|
|
|
|
|
|||||||||||||
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Total Impairment Loss |
|
|||||
|
Investment property |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,557 |
|
|
$ |
5,557 |
|
|
$ |
8,530 |
|
|
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,557 |
|
|
$ |
5,557 |
|
|
$ |
8,530 |
|
As of December 31, 2017, the Company identified indicators of impairment at one of its investment properties. Such indicators included a low occupancy rate, difficulty in leasing space, declining market rents and the related cost of re-leasing. The fair value of this investment property was estimated using the 10-year discounted cash flow model, which includes estimated inflows and outflows over a specific holding period and estimated net disposition proceeds at the end of the 10-year period. The Company utilized a capitalization rate of 7.50% and a discount rate of 8.50% which it believes are reasonable based on current market rates.
NOTE 16 – QUARTERLY SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
The following represents the results of operations, for each quarterly period, during 2017 and 2016.
|
|
|
2017 |
|
|||||||||||||
|
|
|
Dec 31 |
|
|
Sept 30 |
|
|
Jun 30 |
|
|
Mar 31 |
|
||||
|
Total income |
|
$ |
32,529 |
|
|
$ |
32,110 |
|
|
$ |
32,911 |
|
|
$ |
31,607 |
|
|
Net loss |
|
$ |
(10,811 |
) |
|
$ |
(2,856 |
) |
|
$ |
(3,631 |
) |
|
$ |
(1,804 |
) |
|
Net loss per common share, basic and diluted (1) |
|
$ |
(0.30 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.05 |
) |
|
Weighted average number of common shares outstanding, basic and diluted (1) |
|
|
35,615,539 |
|
|
|
35,657,535 |
|
|
|
35,580,556 |
|
|
|
35,428,360 |
|
|
|
|
2016 |
|
|||||||||||||
|
|
|
Dec 31 |
|
|
Sept 30 |
|
|
Jun 30 |
|
|
Mar 31 |
|
||||
|
Total income |
|
$ |
30,921 |
|
|
$ |
30,903 |
|
|
$ |
30,295 |
|
|
$ |
29,379 |
|
|
Net loss |
|
$ |
(459 |
) |
|
$ |
(961 |
) |
|
$ |
(2,300 |
) |
|
$ |
(4,241 |
) |
|
Net loss per common share, basic and diluted (1) |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.12 |
) |
|
Weighted average number of common shares outstanding, basic and diluted (1) |
|
|
35,255,079 |
|
|
|
35,074,161 |
|
|
|
34,867,650 |
|
|
|
34,654,004 |
|
|
(1) |
Quarterly net loss per common share amounts may not total the annual amounts due to rounding and the changes in the number of weighted common shares outstanding. |
74
INLAND REAL ESTATE INCOME TRUST, INC.
Schedule III
Real Estate and Accumulated Depreciation
December 31, 2017
(Dollar amounts in thousands)
|
|
|
|
|
|
|
Initial cost (A) |
|
|
|
|
|
|
Gross amount carried at end of period (B) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Property Name |
|
Encum- brance |
|
|
Land |
|
|
Buildings and Improve- ments |
|
|
Cost Capita- lized Subse- quent to Acquisi- tions |
|
|
Land(C) |
|
|
Buildings and Improve- ments (C) |
|
|
Total (C) |
|
|
Accumu- lated Deprecia- tion (E) |
|
|
Date Con- structed |
|
|
Date Acquired |
|
|
Depre- ciable Lives |
||||||||||
|
2727 Iowa St (D) |
|
$ |
— |
|
|
$ |
2,154 |
|
|
$ |
16,079 |
|
|
$ |
49 |
|
|
$ |
2,154 |
|
|
$ |
16,128 |
|
|
$ |
18,282 |
|
|
$ |
(1,520 |
) |
|
2014-2015 |
|
|
|
2015 |
|
|
15-30 |
|
|
Lawrence, KS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blossom Valley Plaza (D) |
|
|
— |
|
|
|
9,515 |
|
|
|
11,142 |
|
|
|
437 |
|
|
|
9,515 |
|
|
|
11,579 |
|
|
|
21,094 |
|
|
|
(966 |
) |
|
|
1988 |
|
|
|
2015 |
|
|
15-30 |
|
Turlock, CA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Branson Hills Plaza |
|
|
— |
|
|
|
3,787 |
|
|
|
6,039 |
|
|
|
— |
|
|
|
3,787 |
|
|
|
6,039 |
|
|
|
9,826 |
|
|
|
(694 |
) |
|
|
2005 |
|
|
|
2014 |
|
|
15-30 |
|
Branson, MO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coastal North Town Center |
|
|
43,680 |
|
|
|
13,725 |
|
|
|
49,673 |
|
|
|
(744 |
) |
|
|
13,725 |
|
|
|
48,929 |
|
|
|
62,654 |
|
|
|
(2,982 |
) |
|
|
2014 |
|
|
|
2016 |
|
|
15-30 |
|
Myrtle Beach, SC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coastal North Town Center - Phase II |
|
|
— |
|
|
|
365 |
|
|
|
3,034 |
|
|
|
— |
|
|
|
365 |
|
|
|
3,034 |
|
|
|
3,399 |
|
|
|
(54 |
) |
|
|
2016 |
|
|
|
2017 |
|
|
15-30 |
|
Myrtle Beach, SC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dixie Valley |
|
|
6,798 |
|
|
|
2,807 |
|
|
|
9,053 |
|
|
|
949 |
|
|
|
2,807 |
|
|
|
10,002 |
|
|
|
12,809 |
|
|
|
(1,181 |
) |
|
|
1988 |
|
|
|
2014 |
|
|
15-30 |
|
Louisville, KY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dogwood Festival |
|
|
24,352 |
|
|
|
4,500 |
|
|
|
41,865 |
|
|
|
1,472 |
|
|
|
4,500 |
|
|
|
43,337 |
|
|
|
47,837 |
|
|
|
(5,654 |
) |
|
|
2002 |
|
|
|
2014 |
|
|
5-30 |
|
Flowood, MO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
558 |
|
|
|
159 |
|
|
|
857 |
|
|
|
— |
|
|
|
159 |
|
|
|
857 |
|
|
|
1,016 |
|
|
|
(160 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Brooks, GA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
481 |
|
|
|
69 |
|
|
|
761 |
|
|
|
— |
|
|
|
69 |
|
|
|
761 |
|
|
|
830 |
|
|
|
(142 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Daleville, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
520 |
|
|
|
148 |
|
|
|
780 |
|
|
|
— |
|
|
|
148 |
|
|
|
780 |
|
|
|
928 |
|
|
|
(150 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
East Brewton, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General (Hamilton) |
|
|
621 |
|
|
|
100 |
|
|
|
986 |
|
|
|
— |
|
|
|
100 |
|
|
|
986 |
|
|
|
1,086 |
|
|
|
(183 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
LaGrange, GA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General (Wares Cross) |
|
|
681 |
|
|
|
248 |
|
|
|
943 |
|
|
|
— |
|
|
|
248 |
|
|
|
943 |
|
|
|
1,191 |
|
|
|
(176 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
LaGrange, GA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
695 |
|
|
|
273 |
|
|
|
939 |
|
|
|
— |
|
|
|
273 |
|
|
|
939 |
|
|
|
1,212 |
|
|
|
(181 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Madisonville, TN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
631 |
|
|
|
249 |
|
|
|
841 |
|
|
|
— |
|
|
|
249 |
|
|
|
841 |
|
|
|
1,090 |
|
|
|
(157 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Maryville, TN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
601 |
|
|
|
208 |
|
|
|
836 |
|
|
|
— |
|
|
|
208 |
|
|
|
836 |
|
|
|
1,044 |
|
|
|
(156 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Mobile, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
586 |
|
|
|
200 |
|
|
|
818 |
|
|
|
— |
|
|
|
200 |
|
|
|
818 |
|
|
|
1,018 |
|
|
|
(149 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Newport, TN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
847 |
|
|
|
324 |
|
|
|
1,178 |
|
|
|
— |
|
|
|
324 |
|
|
|
1,178 |
|
|
|
1,502 |
|
|
|
(226 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Robertsdale, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
531 |
|
|
|
119 |
|
|
|
805 |
|
|
|
— |
|
|
|
119 |
|
|
|
805 |
|
|
|
924 |
|
|
|
(150 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Valley, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollar General |
|
|
692 |
|
|
|
272 |
|
|
|
939 |
|
|
|
— |
|
|
|
272 |
|
|
|
939 |
|
|
|
1,211 |
|
|
|
(181 |
) |
|
|
2012 |
|
|
|
2012 |
|
|
15-30 |
|
Wetumpka, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastside Junction |
|
|
6,223 |
|
|
|
2,411 |
|
|
|
8,393 |
|
|
|
— |
|
|
|
2,411 |
|
|
|
8,393 |
|
|
|
10,804 |
|
|
|
(895 |
) |
|
|
2008 |
|
|
|
2015 |
|
|
15-30 |
|
Athens, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fairgrounds Crossing |
|
|
13,453 |
|
|
|
6,069 |
|
|
|
22,637 |
|
|
|
— |
|
|
|
6,069 |
|
|
|
22,637 |
|
|
|
28,706 |
|
|
|
(2,257 |
) |
|
|
2008 |
|
|
|
2015 |
|
|
15-30 |
|
Hot Springs, AR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fox Point Plaza |
|
|
10,837 |
|
|
|
3,518 |
|
|
|
12,681 |
|
|
|
717 |
|
|
|
3,518 |
|
|
|
13,398 |
|
|
|
16,916 |
|
|
|
(1,599 |
) |
|
|
2008 |
|
|
|
2014 |
|
|
15-30 |
|
Neenah, WI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frisco Marketplace (D) |
|
|
— |
|
|
|
6,618 |
|
|
|
3,315 |
|
|
|
— |
|
|
|
6,618 |
|
|
|
3,315 |
|
|
|
9,933 |
|
|
|
(419 |
) |
|
|
2002 |
|
|
|
2015 |
|
|
15-30 |
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Green Tree Shopping Center |
|
|
13,100 |
|
|
|
7,218 |
|
|
|
17,846 |
|
|
|
(102 |
) |
|
|
7,218 |
|
|
|
17,744 |
|
|
|
24,962 |
|
|
|
(1,771 |
) |
|
|
1997 |
|
|
|
2015 |
|
|
5-30 |
|
Katy, TX |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harris Plaza (D) |
|
|
— |
|
|
|
6,500 |
|
|
|
19,403 |
|
|
|
1,324 |
|
|
|
6,500 |
|
|
|
20,727 |
|
|
|
27,227 |
|
|
|
(3,223 |
) |
|
2001-2008 |
|
|
|
2014 |
|
|
15-30 |
|
|
Layton, UT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harvest Square |
|
|
6,707 |
|
|
|
2,186 |
|
|
|
9,330 |
|
|
|
136 |
|
|
|
2,186 |
|
|
|
9,466 |
|
|
|
11,652 |
|
|
|
(1,105 |
) |
|
|
2008 |
|
|
|
2014 |
|
|
15-30 |
|
Harvest, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage Square |
|
|
4,460 |
|
|
|
2,028 |
|
|
|
5,538 |
|
|
|
260 |
|
|
|
2,028 |
|
|
|
5,798 |
|
|
|
7,826 |
|
|
|
(651 |
) |
|
|
2010 |
|
|
|
2014 |
|
|
15-30 |
|
Conyers, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kroger - Copps Grocery Store (D) |
|
|
— |
|
|
|
1,440 |
|
|
|
11,799 |
|
|
|
— |
|
|
|
1,440 |
|
|
|
11,799 |
|
|
|
13,239 |
|
|
|
(1,304 |
) |
|
|
2012 |
|
|
|
2014 |
|
|
15-30 |
|
Stevens Point, WI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kroger - Pick n Save Center |
|
|
9,561 |
|
|
|
3,150 |
|
|
|
14,283 |
|
|
|
375 |
|
|
|
3,150 |
|
|
|
14,658 |
|
|
|
17,808 |
|
|
|
(1,756 |
) |
|
|
2011 |
|
|
|
2014 |
|
|
15-30 |
|
West Bend, WI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lakeside Crossing |
|
|
9,910 |
|
|
|
1,460 |
|
|
|
16,999 |
|
|
|
271 |
|
|
|
1,460 |
|
|
|
17,270 |
|
|
|
18,730 |
|
|
|
(2,233 |
) |
|
|
2013 |
|
|
|
2014 |
|
|
15-30 |
|
Lynchburg, VA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landing at Ocean Isle Beach (D) |
|
|
— |
|
|
|
3,053 |
|
|
|
7,081 |
|
|
|
69 |
|
|
|
3,053 |
|
|
|
7,150 |
|
|
|
10,203 |
|
|
|
(907 |
) |
|
|
2009 |
|
|
|
2014 |
|
|
15-30 |
|
Ocean Isle, NC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mansfield Pointe |
|
|
14,200 |
|
|
|
5,350 |
|
|
|
20,002 |
|
|
|
2 |
|
|
|
5,350 |
|
|
|
20,004 |
|
|
|
25,354 |
|
|
|
(2,787 |
) |
|
|
2008 |
|
|
|
2014 |
|
|
15-30 |
|
Mansfield, TX |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplace at El Paseo |
|
|
38,000 |
|
|
|
16,390 |
|
|
|
46,971 |
|
|
|
(517 |
) |
|
|
16,390 |
|
|
|
46,454 |
|
|
|
62,844 |
|
|
|
(3,654 |
) |
|
|
2014 |
|
|
|
2015 |
|
|
15-30 |
|
Fresno, CA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketplace at Tech Center |
|
|
47,550 |
|
|
|
10,684 |
|
|
|
68,580 |
|
|
|
(208 |
) |
|
|
10,684 |
|
|
|
68,372 |
|
|
|
79,056 |
|
|
|
(4,844 |
) |
|
|
2015 |
|
|
|
2015 |
|
|
15-30 |
|
Newport News, VA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MidTowne Shopping Center |
|
|
20,725 |
|
|
|
8,810 |
|
|
|
29,699 |
|
|
|
456 |
|
|
|
8,810 |
|
|
|
30,155 |
|
|
|
38,965 |
|
|
|
(4,116 |
) |
|
2005/2008 |
|
|
|
2014 |
|
|
5-30 |
|
|
Little Rock, AR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Milford Marketplace |
|
|
18,727 |
|
|
|
— |
|
|
|
35,867 |
|
|
|
40 |
|
|
|
— |
|
|
|
35,907 |
|
|
|
35,907 |
|
|
|
(2,885 |
) |
|
|
2007 |
|
|
|
2015 |
|
|
15-30 |
|
Milford, CT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newington Fair (D) |
|
|
— |
|
|
|
7,833 |
|
|
|
8,329 |
|
|
|
331 |
|
|
|
7,833 |
|
|
|
8,660 |
|
|
|
16,493 |
|
|
|
(1,968 |
) |
|
1994/2009 |
|
|
|
2012 |
|
|
15-30 |
|
|
Newington, CT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Hills Square |
|
|
5,525 |
|
|
|
4,800 |
|
|
|
5,493 |
|
|
|
183 |
|
|
|
4,800 |
|
|
|
5,676 |
|
|
|
10,476 |
|
|
|
(786 |
) |
|
|
1997 |
|
|
|
2014 |
|
|
15-30 |
|
Coral Springs, FL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oquirrh Mountain Marketplace (D) |
|
|
— |
|
|
|
4,254 |
|
|
|
14,467 |
|
|
|
(156 |
) |
|
|
4,254 |
|
|
|
14,311 |
|
|
|
18,565 |
|
|
|
(1,085 |
) |
|
2014-2015 |
|
|
|
2015 |
|
|
15-30 |
|
|
Jordan, UT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oquirrh Mountain Marketplace Phase II (D) |
|
|
— |
|
|
|
1,403 |
|
|
|
3,727 |
|
|
|
(54 |
) |
|
|
1,403 |
|
|
|
3,673 |
|
|
|
5,076 |
|
|
|
(217 |
) |
|
2014-2015 |
|
|
|
2016 |
|
|
15-30 |
|
|
Jordan, UT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Park Avenue Shopping Center |
|
|
14,062 |
|
|
|
5,500 |
|
|
|
16,365 |
|
|
|
2,932 |
|
|
|
5,500 |
|
|
|
19,297 |
|
|
|
24,797 |
|
|
|
(2,551 |
) |
|
|
2012 |
|
|
|
2014 |
|
|
15-30 |
|
Little Rock, AR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pentucket Shopping Center |
|
|
14,700 |
|
|
|
5,993 |
|
|
|
11,251 |
|
|
|
29 |
|
|
|
5,993 |
|
|
|
11,280 |
|
|
|
17,273 |
|
|
|
(327 |
) |
|
|
1986 |
|
|
|
2017 |
|
|
15-30 |
|
Plaistow, NH |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plaza at Prairie Ridge (D) |
|
|
— |
|
|
|
618 |
|
|
|
2,305 |
|
|
|
— |
|
|
|
618 |
|
|
|
2,305 |
|
|
|
2,923 |
|
|
|
(234 |
) |
|
|
2008 |
|
|
|
2015 |
|
|
15-30 |
|
Pleasant Prairie, WI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prattville Town Center |
|
|
15,930 |
|
|
|
5,336 |
|
|
|
27,672 |
|
|
|
90 |
|
|
|
5,336 |
|
|
|
27,762 |
|
|
|
33,098 |
|
|
|
(2,817 |
) |
|
|
2007 |
|
|
|
2015 |
|
|
15-30 |
|
Prattville, AL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regal Court |
|
|
26,000 |
|
|
|
5,873 |
|
|
|
41,181 |
|
|
|
1,151 |
|
|
|
5,873 |
|
|
|
42,332 |
|
|
|
48,205 |
|
|
|
(4,211 |
) |
|
|
2008 |
|
|
|
2015 |
|
|
5-30 |
|
Shreveport, LA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlers Ridge |
|
|
76,533 |
|
|
|
25,961 |
|
|
|
98,157 |
|
|
|
186 |
|
|
|
25,961 |
|
|
|
98,343 |
|
|
|
124,304 |
|
|
|
(8,317 |
) |
|
|
2011 |
|
|
|
2015 |
|
|
15-30 |
|
Pittsburgh, PA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shoppes at Lake Park (D) |
|
|
— |
|
|
|
2,285 |
|
|
|
8,527 |
|
|
|
— |
|
|
|
2,285 |
|
|
|
8,527 |
|
|
|
10,812 |
|
|
|
(904 |
) |
|
|
2008 |
|
|
|
2015 |
|
|
15-30 |
|
West Valley City. UT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shoppes at Market Pointe |
|
|
13,700 |
|
|
|
12,499 |
|
|
|
8,388 |
|
|
|
590 |
|
|
|
12,499 |
|
|
|
8,978 |
|
|
|
21,477 |
|
|
|
(1,247 |
) |
|
2006-2007 |
|
|
|
2015 |
|
|
15-30 |
|
|
Papillion, NE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shoppes at Prairie Ridge |
|
|
15,591 |
|
|
|
7,521 |
|
|
|
22,468 |
|
|
|
279 |
|
|
|
7,521 |
|
|
|
22,747 |
|
|
|
30,268 |
|
|
|
(2,454 |
) |
|
|
2009 |
|
|
|
2014 |
|
|
15-30 |
|
Pleasant Prairie, WI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Shoppes at Branson Hills |
|
|
20,240 |
|
|
|
4,418 |
|
|
|
37,229 |
|
|
|
920 |
|
|
|
4,418 |
|
|
|
38,149 |
|
|
|
42,567 |
|
|
|
(4,078 |
) |
|
|
2005 |
|
|
|
2014 |
|
|
15-30 |
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shops at Hawk Ridge (D) |
|
|
— |
|
|
|
1,329 |
|
|
|
10,341 |
|
|
|
240 |
|
|
|
1,329 |
|
|
|
10,581 |
|
|
|
11,910 |
|
|
|
(1,096 |
) |
|
|
2009 |
|
|
|
2015 |
|
|
5-30 |
|
St. Louis, MO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasure Valley (D) |
|
|
— |
|
|
|
3,133 |
|
|
|
12,000 |
|
|
|
— |
|
|
|
3,133 |
|
|
|
12,000 |
|
|
|
15,133 |
|
|
|
(1,177 |
) |
|
|
2014 |
|
|
|
2015 |
|
|
15-30 |
|
Nampa, ID |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Village at Burlington Creek |
|
|
17,723 |
|
|
|
10,789 |
|
|
|
19,385 |
|
|
|
342 |
|
|
|
10,789 |
|
|
|
19,727 |
|
|
|
30,516 |
|
|
|
(1,807 |
) |
|
2007 & 2015 |
|
|
|
2015 |
|
|
5-30 |
|
|
Kansas City, MO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Walgreens Plaza |
|
|
4,650 |
|
|
|
2,624 |
|
|
|
9,683 |
|
|
|
199 |
|
|
|
2,624 |
|
|
|
9,882 |
|
|
|
12,506 |
|
|
|
(1,010 |
) |
|
|
2011 |
|
|
|
2015 |
|
|
15-30 |
|
Jacksonville, NC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wedgewood Commons |
|
|
15,260 |
|
|
|
2,220 |
|
|
|
26,577 |
|
|
|
129 |
|
|
|
2,220 |
|
|
|
26,706 |
|
|
|
28,926 |
|
|
|
(3,745 |
) |
|
2009-2013 |
|
|
|
2013 |
|
|
5-30 |
|
|
Olive Branch, MS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Whispering Ridge (D) |
|
|
— |
|
|
|
1,627 |
|
|
|
10,418 |
|
|
|
(6,670 |
) |
|
|
1,627 |
|
|
|
3,748 |
|
|
|
5,375 |
|
|
|
— |
|
|
|
2007 |
|
|
|
2015 |
|
|
5-30 |
|
Omaha, NE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
White City |
|
|
49,400 |
|
|
|
18,961 |
|
|
|
70,423 |
|
|
|
1,679 |
|
|
|
18,961 |
|
|
|
72,102 |
|
|
|
91,063 |
|
|
|
(6,990 |
) |
|
|
2013 |
|
|
|
2015 |
|
|
15-30 |
|
Shrewsbury, MA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wilson Marketplace |
|
|
24,480 |
|
|
|
11,155 |
|
|
|
27,498 |
|
|
|
— |
|
|
|
11,155 |
|
|
|
27,498 |
|
|
|
38,653 |
|
|
|
(926 |
) |
|
|
2007 |
|
|
|
2017 |
|
|
15-30 |
|
Wilson, NC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yorkville Marketplace (D) |
|
|
— |
|
|
|
4,990 |
|
|
|
13,928 |
|
|
|
498 |
|
|
|
4,990 |
|
|
|
14,426 |
|
|
|
19,416 |
|
|
|
(1,679 |
) |
|
2002 & 2007 |
|
|
|
2015 |
|
|
15-30 |
|
|
Yorkville, IL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
$ |
609,521 |
|
|
$ |
277,229 |
|
|
$ |
1,003,804 |
|
|
$ |
7,884 |
|
|
$ |
277,229 |
|
|
$ |
1,011,688 |
|
|
$ |
1,288,917 |
|
|
$ |
(101,094 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(A) |
The initial cost to the Company represents the original purchase price of the property including impairment charges recorded subsequent to acquisition to reduce basis. |
|
(B) |
The aggregate cost of real estate owned at December 31, 2017 and 2016 for federal income tax purposes was approximately $1,440,279 and $1,364,864, respectively (unaudited). |
|
(C) |
Reconciliation of real estate owned: |
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Balance at January 1, |
|
$ |
1,233,231 |
|
|
$ |
1,161,437 |
|
|
$ |
414,463 |
|
|
Acquisitions |
|
|
59,306 |
|
|
|
68,977 |
|
|
|
743,893 |
|
|
Improvements, net of master lease |
|
|
5,594 |
|
|
|
2,817 |
|
|
|
3,081 |
|
|
Impairment of investment property |
|
|
(9,214 |
) |
|
|
— |
|
|
|
— |
|
|
Balance at December 31, |
|
$ |
1,288,917 |
|
|
$ |
1,233,231 |
|
|
$ |
1,161,437 |
|
|
(D) |
These properties serve as security for our Credit Facility. |
|
(E) |
Reconciliation of accumulated depreciation: |
|
Balance at January 1, |
|
$ |
62,631 |
|
|
$ |
27,545 |
|
|
$ |
6,236 |
|
|
Depreciation expense |
|
|
39,497 |
|
|
|
35,086 |
|
|
|
21,309 |
|
|
Impairment of investment property |
|
|
(1,034 |
) |
|
|
— |
|
|
|
— |
|
|
Balance at December 31, |
|
$ |
101,094 |
|
|
$ |
62,631 |
|
|
$ |
27,545 |
|
77
None.
Evaluation of Disclosure Controls and Procedures
The Company’s management has evaluated, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the principal executive and principal financial officers have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officers, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in Internal Control - Integrated Framework (2013) issued by the COSO, our management concluded that our internal control over financial reporting was effective as of December 31, 2017.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to permanent rules adopted by the SEC, permitting the Company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
None.
78
The information required by this Item will be presented in our definitive proxy statement for our 2018 annual meeting of stockholders which we anticipate filing with the SEC no later than 120 days after the end of the fiscal year, and is incorporated by reference into this Item 10.
We have adopted a code of ethics, which is available on our website free of charge at inland-investments.com/inland-income-trust. We will provide the code of ethics free of charge upon request to our investor services group.
The information required by this Item will be presented in our definitive proxy statement for our 2018 annual meeting of stockholders which we anticipate filing with the SEC no later than 120 days after the end of the fiscal year, and is incorporated by reference into this Item 11.
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
The information required by this Item will be presented in our definitive proxy statement for our 2018 annual meeting of stockholders which we anticipate filing with the SEC no later than 120 days after the end of the fiscal year and is incorporated by reference into this Item 12.
The information required by this Item will be presented in our definitive proxy statement for our 2018 annual meeting of stockholders which we anticipate filing with the SEC no later than 120 days after the end of the fiscal year and is incorporated by reference into this Item 13.
The information required by this Item will be presented in our definitive proxy statement for our 2018 annual meeting of stockholders which we anticipate filing with the SEC no later than 120 days after the end of the fiscal year, and is incorporated by reference into this Item 14.
79
|
(a) |
List of documents filed as part of this report: |
|
|
(1) |
Financial Statements: |
Report of Independent Registered Public Accounting Firm
The consolidated financial statements of the Company are set forth in the report in Item 8.
|
|
(2) |
Financial Statement Schedules: |
Financial statement schedule for the year ended December 31, 2017 is submitted herewith.
Real Estate and Accumulated Depreciation (Schedule III).
|
|
(3) |
Exhibits: |
The list of exhibits filed as part of this Annual Report is set forth on the Exhibit Index attached hereto.
|
(b) |
Exhibits: |
The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
|
(c) |
Financial Statement Schedules: |
All schedules other than those indicated in the index as set forth in Item 8 have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
None.
80
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10.4 |
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10.6 |
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10.7 |
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10.8 |
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81
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10.10 |
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10.11 |
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10.12 |
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10.13 |
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10.14 |
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10.15 |
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10.16 |
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10.17 |
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10.18 |
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82
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10.19 |
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10.20 |
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10.21 |
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10.22 |
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10.23 |
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10.24 |
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10.25 |
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10.26 |
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10.27 |
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10.28 |
|
83
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10.29 |
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10.30 |
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10.31 |
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10.32 |
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10.33 |
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10.34 |
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10.35 |
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10.36 |
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84
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10.37 |
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10.38 |
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10.39 |
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10.40 |
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10.41 |
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10.42 |
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10.43 |
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85
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10.45 |
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10.46 |
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10.47 |
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10.48 |
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10.49 |
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10.50 |
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10.51 |
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10.52 |
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||
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86
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||
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10.54 |
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10.55 |
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10.56 |
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10.57 |
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10.58 |
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10.59 |
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10.60 |
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10.61 |
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10.62 |
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10.63 |
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87
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||
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||
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10.65 |
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10.66 |
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10.67 |
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10.68 |
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10.69 |
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10.70 |
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10.71 |
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10.72 |
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10.73 |
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10.74 |
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10.75 |
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10.76 |
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88
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||
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||
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10.78 |
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10.79 |
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10.80 |
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10.81 |
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14.1 |
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23.1 |
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31.3 |
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32.2 |
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32.3 |
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101 |
|
The following financial information from our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 16, 2018, is formatted in Extensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements (tagged as blocks of text). |
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* Filed as part of this Annual Report on Form 10-K. |
89
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INLAND REAL ESTATE INCOME TRUST, INC.
|
By: |
|
/s/ Mitchell A. Sabshon |
|
Name: |
|
Mitchell A. Sabshon |
|
|
|
President and Chief Executive Officer |
|
Date: |
|
March 16, 2018 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
|
By: |
|
/s/ Daniel L. Goodwin |
|
Director and Chairman of the Board |
|
March 16, 2018 |
|
Name: |
|
Daniel L. Goodwin |
|
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|
|
By: |
|
/s/ Mitchell A. Sabshon |
|
Director, President and Chief Executive Officer (principal executive officer) |
|
March 16, 2018 |
|
Name: |
|
Mitchell A. Sabshon |
|
|
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By: |
|
/s/ Catherine L. Lynch |
|
Chief Financial Officer (co-principal financial officer) |
|
March 16, 2018 |
|
Name: |
|
Catherine L. Lynch |
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|
By: |
|
/s/ David Z. Lichterman |
|
Vice President, Treasurer and Chief Accounting Officer (co-principal financial officer and principal accounting officer) |
|
March 16, 2018 |
|
Name: |
|
David Z. Lichterman |
|
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|
By: |
|
/s/ Lee A. Daniels |
|
Director |
|
March 16, 2018 |
|
Name: |
|
Lee A. Daniels |
|
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|
By: |
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/s/ Stephen Davis |
|
Director |
|
March 16, 2018 |
|
Name: |
|
Stephen Davis |
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By: |
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/s/ Gwen Henry |
|
Director |
|
March 16, 2018 |
|
Name: |
|
Gwen Henry |
|
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|
By: |
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/s/ Bernard J. Michael |
|
Director |
|
March 16, 2018 |
|
Name: |
|
Bernard J. Michael |
|
|
|
|
90
Exhibit 21.1
|
SUBSIDIARIES OF THE REGISTRANT |
||
|
|
|
|
|
Name of Subsidiary |
|
State of FORMATION |
|
IREIT Athens Eastside, L.L.C. |
|
Delaware |
|
IREIT Branson Hills, L.L.C. |
|
Delaware |
|
IREIT Branson Hills Plaza – T, L.L.C. |
|
Delaware |
|
IREIT Brooks DG, L.L.C. |
|
Delaware |
|
IREIT Conyers Heritage, L.L.C. |
|
Delaware |
|
IREIT Coral Springs North Hills, L.L.C. |
|
Delaware |
|
IREIT Daleville DG, L.L.C. |
|
Delaware |
|
IREIT DG SPE II Member, L.L.C. |
|
Delaware |
|
IREIT DG SPE Member, L.L.C. |
|
Delaware |
|
IREIT East Brewton DG, L.L.C. |
|
Delaware |
|
IREIT Flowood Dogwood, L.L.C. |
|
Delaware |
|
IREIT Fresno El Paseo, L.L.C. |
|
Delaware |
|
IREIT Frisco Marketplace, L.L.C. |
|
Delaware |
|
IREIT Frisco Marketplace Outlot, L.L.C. |
|
Delaware |
|
IREIT Harvest Square, L.L.C. |
|
Delaware |
|
IREIT Hot Springs Fairgrounds, L.L.C. |
|
Delaware |
|
IREIT Jacksonville Richlands, L.L.C. |
|
Delaware |
|
IREIT Kansas City Burlington Creek, L.L.C. |
|
Delaware |
|
IREIT Katy Green Tree, L.L.C. |
|
Delaware |
|
IREIT LaGrange Hamilton DG, L.L.C. |
|
Delaware |
|
IREIT LaGrange Wares Cross DG, L.L.C. |
|
Delaware |
|
IREIT Lake St. Louis Hawk Ridge, L.L.C. |
|
Delaware |
|
IREIT Lawrence Iowa Street, L.L.C. |
|
Delaware |
|
IREIT Layton Pointe, L.L.C. |
|
Delaware |
|
IREIT Little Rock Midtowne II, L.L.C. |
|
Delaware |
|
IREIT Little Rock Midtowne, L.L.C. |
|
Delaware |
|
IREIT Little Rock Park Avenue, L.L.C. |
|
Delaware |
|
IREIT Louisville Dixie Valley, L.L.C. |
|
Delaware |
|
IREIT Lynchburg Lakeside, L.L.C. |
|
Delaware |
|
IREIT Madisonville DG, L.L.C. |
|
Delaware |
|
IREIT Mansfield Pointe, L.L.C. |
|
Delaware |
|
IREIT Maryville DG, L.L.C. |
|
Delaware |
|
IREIT Milford Marketplace, L.L.C. |
|
Delaware |
|
IREIT Mobile Moffett DG, L.L.C. |
|
Delaware |
|
IREIT MS Mezz TRS, LLC |
|
Delaware |
8066619v2
|
SUBSIDIARIES OF THE REGISTRANT |
||
|
|
|
|
|
|
Delaware |
|
|
IREIT Nampa Treasure Valley, L.L.C. |
|
Delaware |
|
IREIT Neenah Fox Point, L.L.C. |
|
Delaware |
|
IREIT Newington Fair, L.L.C. |
|
Delaware |
|
IREIT Newport DG, L.L.C. |
|
Delaware |
|
IREIT Newport News Tech Center, L.L.C. |
|
Delaware |
|
IREIT North Myrtle Beach Coastal North, L.L.C. |
|
Delaware |
|
IREIT Ocean Isle Beach Landing, L.L.C. |
|
Delaware |
|
IREIT Olive Branch Wedgewood, L.L.C. |
|
Delaware |
|
IREIT Papillion Market Pointe, L.L.C. |
|
Delaware |
|
IREIT Pittsburgh Settlers Ridge, L.L.C. |
|
Delaware |
|
IREIT Plaistow Pentucket, L.L.C. |
|
Delaware |
|
IREIT Pleasant Prairie Plaza, L.L.C. |
|
Delaware |
|
IREIT Pleasant Prairie Ridge, L.L.C. |
|
Delaware |
|
IREIT Prattville Legends, L.L.C. |
|
Delaware |
|
IREIT Robertsdale DG, L.L.C. |
|
Delaware |
|
IREIT Shoppes at Branson Hills – K, L.L.C. |
|
Delaware |
|
IREIT Shreveport Regal Court, L.L.C. |
|
Delaware |
|
IREIT Shrewsbury White City, L.L.C. |
|
Delaware |
|
IREIT South Jordan Oquirrh Mountain, L.L.C. |
|
Delaware |
|
IREIT Stevens Point Pinecrest, L.L.C. |
|
Delaware |
|
IREIT TRS, LLC |
|
Delaware |
|
IREIT Turlock Blossom Valley, L.L.C. |
|
Delaware |
|
IREIT Valley DG, L.L.C. |
|
Delaware |
|
IREIT West Bend Main, L.L.C. |
|
Delaware |
|
IREIT West Valley City Lake Park, L.L.C. |
|
Delaware |
|
IREIT Wetumpka DG, L.L.C. |
|
Delaware |
|
IREIT Wilson Marketplace, L.L.C. |
|
Delaware |
|
IREIT Yorkville Marketplace, L.L.C. |
|
Delaware |
|
RE Income Omaha Whispering Ridge, L.L.C. |
|
Delaware |
2
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Inland Real Estate Income Trust, Inc.:
We consent to the incorporation by reference in the registration statement (No. 333-207519) on Form S-3D of Inland Real Estate Income Trust, Inc. of our report dated March 16, 2018, with respect to the consolidated balance sheets of Inland Real Estate Income Trust, Inc. as of December 31, 2017 and 2016, and the related consolidated statements of operations and comprehensive loss, equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes and financial statement Schedule III (collectively, the consolidated financial statements), which report appears in the December 31, 2017 annual report on Form 10-K of Inland Real Estate Income Trust, Inc.
/s/ KPMG LLP
Chicago, Illinois
March 16, 2018
Exhibit 31.1
CERTIFICATION
I, Mitchell A. Sabshon, certify that:
|
|
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. |
|
|
|
/s/ Mitchell A. Sabshon |
|
Name: |
|
Mitchell A. Sabshon |
|
Title: |
|
President and Chief Executive Officer (Principal Executive Officer) |
|
Date: |
|
March 16, 2018 |
Exhibit 31.2
CERTIFICATION
I, Catherine L. Lynch, certify that:
|
|
1. |
I have reviewed this Annual Report on Form 10-K of Inland Real Estate Income Trust, 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. |
|
|
|
/s/ Catherine L. Lynch |
|
Name: |
|
Catherine L. Lynch |
|
Title: |
|
Chief Financial Officer |
|
|
|
(Co-Principal Financial Officer) |
|
Date: |
|
March 16, 2018 |
Exhibit 31.3
CERTIFICATION
I, David Z. Lichterman, certify that:
|
|
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. |
|
|
|
/s/ David Z. Lichterman |
|
Name: |
|
David Z. Lichterman |
|
Title: |
|
Vice President, Treasurer and Chief |
|
|
|
Accounting Officer (Co-Principal Financial Officer and Principal Accounting Officer) |
|
Date: |
|
March 16, 2018 |
Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of Inland Real Estate Income Trust, Inc. (the “Company”) for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Mitchell A. Sabshon, President and Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
|
|
1. |
The Report 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 the Company. |
|
Date: March 16, 2018 |
By: |
|
/s/ Mitchell A. Sabshon |
|
|
Name: |
|
Mitchell A. Sabshon |
|
|
Title: |
|
President and Chief Executive Officer |
|
|
|
|
(Principal Executive Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
Certification Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of Inland Real Estate Income Trust, Inc. (the “Company”) for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Catherine L. Lynch, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of her knowledge:
|
|
1. |
The Report 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 the Company. |
|
Date: March 16, 2018 |
By: |
|
/s/ Catherine L. Lynch |
|
|
Name: |
|
Catherine L. Lynch |
|
|
Title: |
|
Chief Financial Officer |
|
|
|
|
(Co-Principal Financial Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.3
Certification Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of Inland Real Estate Income Trust, Inc. (the “Company”) for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), David Z. Lichterman, Vice President, Treasurer and Chief Accounting Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company |
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Date: March 16, 2018 |
By: |
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/s/ David Z. Lichterman |
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Name: |
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David Z. Lichterman |
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Title: |
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Vice President, Treasurer and Chief Accounting Officer (Co-Principal Financial Officer and Principal Accounting Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Document and Entity Information - USD ($) |
12 Months Ended | ||
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Dec. 31, 2017 |
Mar. 08, 2018 |
Jun. 30, 2017 |
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| Document And Entity Information [Abstract] | |||
| Entity Registrant Name | Inland Real Estate Income Trust, Inc. | ||
| Entity Central Index Key | 0001528985 | ||
| Document Type | 10-K | ||
| Document Period End Date | Dec. 31, 2017 | ||
| Amendment Flag | false | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity a Well-known Seasoned Issuer | No | ||
| Entity a Voluntary Filer | No | ||
| Entity's Reporting Status Current | Yes | ||
| Entity Filer Category | Non-accelerated Filer | ||
| Entity Public Float | $ 801,423,971 | ||
| Entity Common Stock, Shares Outstanding | 35,600,624 | ||
| Document Fiscal Period Focus | FY | ||
| Document Fiscal Year Focus | 2017 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
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| Statement Of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 40,000,000 | 40,000,000 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 1,460,000,000 | 1,460,000,000 |
| Common stock, shares issued | 35,498,444 | 35,262,283 |
| Common stock, shares outstanding | 35,498,444 | 35,262,283 |
| Additional paid in capital, offering costs | $ 87,059 | $ 87,059 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) |
12 Months Ended | ||
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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| Income: | |||
| Rental income | $ 99,413,000 | $ 93,719,000 | $ 60,912,000 |
| Tenant recovery income | 29,270,000 | 26,723,000 | 15,482,000 |
| Other property income | 474,000 | 1,056,000 | 148,000 |
| Total income | 129,157,000 | 121,498,000 | 76,542,000 |
| Cost and Expenses: | |||
| Property operating expenses | 22,369,000 | 21,460,000 | 11,850,000 |
| Real estate tax expense | 15,992,000 | 14,202,000 | 8,938,000 |
| General and administrative expenses | 5,200,000 | 5,908,000 | 4,961,000 |
| Acquisition related costs | 754,000 | (1,556,000) | 13,903,000 |
| Business management fee | 9,196,000 | 8,580,000 | 5,501,000 |
| Provision for impairment of investment property | 8,530,000 | 0 | 0 |
| Depreciation and amortization | 61,804,000 | 59,860,000 | 34,573,000 |
| Total expenses | 123,845,000 | 108,454,000 | 79,726,000 |
| Operating income (loss) | 5,312,000 | 13,044,000 | (3,184,000) |
| Interest expense | (24,582,000) | (21,635,000) | (10,339,000) |
| Interest and other income | 147,000 | 378,000 | 205,000 |
| Equity in earnings (loss) of unconsolidated entity | 21,000 | 252,000 | (118,000) |
| Net loss | $ (19,102,000) | $ (7,961,000) | $ (13,436,000) |
| Net loss per common share, basic and diluted | $ (0.54) | $ (0.23) | $ (0.48) |
| Weighted average number of common shares outstanding, basic and diluted | 35,571,249 | 34,963,827 | 27,737,301 |
| Comprehensive loss: | |||
| Net loss | $ (19,102,000) | $ (7,961,000) | $ (13,436,000) |
| Unrealized gain (loss) on derivatives | 1,043,000 | 1,861,000 | (4,612,000) |
| Reclassification adjustment for amounts included in net loss | 2,405,000 | 4,038,000 | 2,546,000 |
| Comprehensive loss | $ (15,654,000) | $ (2,062,000) | $ (15,502,000) |
Organization |
12 Months Ended |
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Dec. 31, 2017 | |
| Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
| Organization | NOTE 1 – ORGANIZATION Inland Real Estate Income Trust, Inc. (the “Company”) was formed on August 24, 2011 to acquire and manage a portfolio of commercial real estate investments located in the United States. The Company has primarily focused on acquiring retail properties. The Company has invested in joint ventures and may continue to invest in additional joint ventures or acquire other real estate assets such as office and medical office buildings, multi-family properties and industrial/distribution and warehouse facilities if its management believes the expected returns from those investments exceed that of retail properties. The Company also may invest in real estate-related equity securities of both publicly traded and private real estate companies, as well as commercial mortgage-backed securities. The Company entered into a Business Management Agreement with IREIT Business Manager & Advisor, Inc. (the “Business Manager”), an indirect wholly owned subsidiary of Inland Real Estate Investment Corporation (the “Sponsor”), to be the Business Manager to the Company. At December 31, 2017, the Company owned 59 retail properties, totaling 6,860,923 square feet. The properties are located in 24 states. At December 31, 2017, the portfolio had a weighted average physical occupancy of 93.9% and economic occupancy of 94.8%. Economic occupancy excludes square footage associated with an earnout component. On January 16, 2018, the Company effected a 1-for-2.5 reverse stock split of its issued and outstanding common stock whereby every 2.5 shares of issued and outstanding common stock were converted into one share of its common stock (the “Reverse Stock Split”). In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), all share information presented has been retroactively adjusted to reflect the Reverse Stock Split.
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Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In the opinion of management, all adjustments necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods are presented. Actual results could differ from those estimates. Information with respect to square footage and occupancy is unaudited. Consolidation The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly owned subsidiaries. Wholly owned subsidiaries generally consist of limited liability companies (“LLCs”). All intercompany balances and transactions have been eliminated in consolidation. Each property is owned by a separate legal entity which maintains its own books and financial records and each entity’s assets are not available to satisfy the liabilities of other affiliated entities. The fiscal year-end of the Company is December 31. Acquisitions Upon acquisition of real estate investment properties, the Company allocates the total purchase price of each property that is accounted for as an asset acquisition based on the relative fair value of the tangible and intangible assets acquired and liabilities assumed based on Level 3 inputs, such as comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions, from a third party appraisal or other market sources. The acquisition date is the date on which the Company obtains control of the real estate investment property and transaction costs are capitalized. Assets and liabilities acquired typically include land, building and site improvements and identified intangible assets and liabilities, consisting of the value of above market and below market leases and the value of in-place leases. The portion of the purchase price allocated to above market lease values are included in acquired lease intangible assets, net and is amortized on a straight-line basis over the term of the related lease as a reduction to rental income. The portion allocated to below market lease values are included in acquired intangible liabilities, net and is amortized as an increase to rental income over the term of the lease including any renewal periods with fixed rate renewals. The portion of the purchase price allocated to acquired in-place lease value is included in acquired lease intangible assets, net and is amortized on a straight-line basis over the acquired leases’ weighted average remaining term. The Company determines the fair value of the tangible assets consisting of land and buildings by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and buildings. The Company determines the fair value of assumed debt by calculating the net present value of the mortgage payments using interest rates for debt with similar terms and maturities. Differences between the fair value and the stated value is recorded as a discount or premium and amortized over the remaining term using the effective interest method. Certain of the Company’s properties included earnout components to the purchase price, meaning the Company did not pay a portion of the purchase price of the property at closing, although the Company owns the entire property. The Company is not obligated to settle the contingent portion of the purchase price unless space which was vacant at the time of acquisition is later leased by the seller within the time limits and parameters set forth in the related acquisition agreements. The Company’s policy is to record earnout components when estimable and probable. In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance that clarified the definition of a business and assists in the evaluation of whether a transaction should be accounted for as an acquisition of an asset or a business combination. The Company early adopted the new guidance and modified its accounting policy effective October 1, 2016. Prior to October 1, 2016, the Company expensed all acquisition expenses as incurred whether or not the acquisition was completed, and assets acquired and liabilities assumed were measured at their fair values rather than at their relative fair values as described above. Additionally, earnouts were recorded as additional purchase price of the related property and as a liability included in deferred investment property acquisition obligations on the accompanying consolidated balance sheets. The amount recorded was based on the Company’s best estimate of the potential future earnout payments at the date of an acquisition. The Company recorded the effect of changes in the underlying liability assumptions in acquisition related costs on the accompanying consolidated statements of operations and comprehensive loss. Impairment of Investment Properties The Company assesses the carrying values of its respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Recoverability of the assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. In order to review its assets for recoverability, the Company considers current market conditions, as well as its intent with respect to holding or disposing of the asset. If the Company’s analysis indicates that the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, the Company recognizes an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate property. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third party appraisals, where considered necessary (Level 3 inputs). The Company estimates the future undiscounted cash flows based on management’s intent as follows: (i) for real estate properties that the Company intends to hold long-term, including land held for development, properties currently under development and operating buildings, recoverability is assessed based on the estimated future net rental income from operating the property and termination value; and (ii) for real estate properties that the Company intends to sell, including land parcels, properties currently under development and operating buildings, recoverability is assessed based on estimated net proceeds, including net rental income during the holding period, from disposition that are estimated based on future net rental income of the property and utilizing expected market capitalization rates. The use of projected future cash flows is based on assumptions that are consistent with our estimates of future expectations and the strategic plan the Company uses to manage its underlying business. However, assumptions and estimates about future cash flows, including comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions which impact the discounted cash flow approach to determining value are complex and subjective. Changes in economic and operating conditions and the Company’s ultimate investment intent that occur subsequent to the impairment analysis could impact these assumptions and result in future impairment charges of real estate properties. During the year ended December 31, 2017, the Company recorded an impairment charge of $8,530 which is included in provision for impairment of investment property on the accompanying consolidated statements of operations and comprehensive loss. During the years ended December 31, 2016 and 2015, the Company incurred no impairment charges. REIT Status The Company has qualified and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ended December 31, 2013. As a result, the Company generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income (subject to certain adjustments and excluding any net capital gain) to its stockholders. The Company will monitor the business and transactions that may potentially impact its REIT status. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income. Cash and Cash Equivalents The Company considers all demand deposits, money market accounts and all short term investments with a maturity of three months or less, at the date of purchase, to be cash equivalents. The account balance may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions’ non-performance. Valuation of Accounts and Rents Receivable The Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability factors taken into consideration are the amounts outstanding and payment history of the tenant, which taken as a whole determines the valuation. Allowances are taken for those balances that the Company deems to be uncollectible, including any amounts relating to straight-line income receivables. Capitalization and Depreciation Real estate acquisitions are recorded at cost less accumulated depreciation. Improvement and betterment costs are capitalized, and ordinary repairs and maintenance are expensed as incurred. Cost capitalization and the estimate of useful lives require judgment and include significant estimates that can and do change. Depreciation expense is computed using the straight-line method. The Company anticipates the estimated useful lives of its assets by class to be generally:
Depreciation expense was approximately $39,497, $35,086 and $21,309 for the years ended December 31, 2017, 2016 and 2015, respectively.
Partially-Owned Entities The Company will consolidate the operations of a joint venture if the Company determines that it is either the primary beneficiary of a variable interest entity (VIE) or has substantial influence and control of the entity. In instances where the Company determines that it is not the primary beneficiary of a VIE or the Company does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Company will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Company’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Company’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. Debt Issuance Costs Debt issuance costs are amortized on a straight-line basis, which approximates the effective interest method, over the term, or anticipated repayment date, of the related agreements as a component of interest expense. These costs are reported as a direct deduction to the Company’s outstanding mortgages and credit facility payable. The adoption of Accounting Standards Update (“ASU”) No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt issuance Costs issued by the FASB resulted in the reclassification of $4,467 from deferred expenses, net to mortgages and credit facility payable, net on the consolidated balance sheets as of December 31, 2015. Fair Value Measurements The Company has estimated fair value using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition. The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
The Company’s cash equivalents, accounts receivable and payables and accrued expenses all approximate fair value due to the short term nature of these financial instruments. The Company’s financial instruments measured on a recurring basis include derivative interest rate instruments. Derivatives The Company uses derivative instruments, such as interest rate swaps, primarily to manage exposure to interest rate risks inherent in variable rate debt. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. The Company’s interest rate swaps involve the receipt of variable-rate 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. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date. The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedging instruments under the accounting requirements for derivatives and hedging. Revenue Recognition The Company commences revenue recognition on its leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of, or controls the physical use of, the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If the Company is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If the Company concludes it is not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded by the Company under the lease are treated as lease incentives which reduce revenue recognized over the term of the lease. In these circumstances, the Company begins revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. The Company considers a number of different factors to evaluate whether it or the lessee is the owner of the tenant improvements for accounting purposes. Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rent receivable in the accompanying consolidated balance sheets. Due to the impact of the straight-line basis, rental income generally will be greater than the cash collected in the early years and will decrease in the later years of a lease. Reimbursements from tenants for recoverable real estate tax and operating expenses are accrued as revenue in the period the applicable expenses are incurred. The Company makes certain assumptions and judgments in estimating the reimbursements at the end of each reporting period. The Company does not expect the actual results to materially differ from the estimated reimbursement. The Company records lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and amounts due are considered collectible. Upon early lease termination, the Company provides for gains or losses related to unrecovered intangibles and other assets. As a lessor, the Company defers the recognition of contingent rental income, such as percentage rent, until the specified target that triggered the contingent rental income is achieved. Equity-Based Compensation The Company has restricted shares and units outstanding at December 31, 2017 and 2016. The Company recognizes expense related to the fair value of equity-based compensation awards as general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss. The Company primarily recognizes expense based on the fair value at the grant date on a straight-line basis over the vesting period representing the requisite service period. See Note 8 - "Equity-Based Compensation" for further information. Recent Accounting Pronouncements
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. The update, among other things,
The amendment is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the update. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this update. The amended presentation and disclosure guidance is required only prospectively. The Company continues to evaluate ASU No. 2017-12 to determine the impact on its consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new update will require that amounts described as restricted cash and restricted cash equivalents be included in beginning and ending-of-period reconciliation cash shown on the statement of cash flows. The amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. At December 31, 2017, restricted cash of $4,940 was recorded as other assets on the Company’s consolidated balance sheets and the Company does not believe that the adoption of ASU No. 2016-18 will have a material impact on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issues addressed in the new guidance include the cash flow classification of: debt prepayment and debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The standard will be effective for fiscal years beginning after December 15, 2017, for public companies. The Company intends to adopt the new accounting standard by making a policy election to classify distributions received from an equity method investee as operating cash inflows up to its cumulative equity in earnings and any excess as investing inflows. The Company does not believe that ASU No. 2016-15 will have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. 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. 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 No. 2016-02 supersedes the previous leases standard, Leases (Topic 840). The Company has identified its lease revenues and non-lease revenues under the guidance. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company expects to adopt the guidance on a modified retrospective basis and upon adoption of the Leases guidance, non-lease components of new, extended or modified leases, including common area maintenance reimbursements, will be accounted for under the Revenue from Contracts with Customers guidance as described below. The Company is also the lessee under a ground lease, which it will be required to recognize right of use asset and a related lease liability on its consolidated balance sheets upon adoption. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, although it will not affect the accounting for rental related revenues. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. The Company anticipates selecting the modified retrospective transition method with a cumulative effect recognized as of the date of adoption and will adopt the new standard effective January 1, 2018, when effective. The Company has evaluated the specific revenue streams that could be most significantly impacted by this ASU and expects that the revenue recognition from these activities and other miscellaneous income will be generally consistent with current recognition methods, and therefore does not expect material changes to the consolidated financial statements as a result of adoption. The Company’s remaining implementation items include calculating the cumulative effect adjustment, if any, to be recorded upon adoption, drafting revised disclosures in accordance with the new standard and implementing changes to internal control policies and procedures, if any. Common area maintenance reimbursements to be impacted by ASU No. 2014-09 will not be addressed until the Company's adoption of ASU No. 2016-02, considering its revisions to accounting for common area maintenance described above.
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Equity |
12 Months Ended |
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Dec. 31, 2017 | |
| Equity [Abstract] | |
| Equity | NOTE 3 – EQUITY The Company commenced an initial public “best efforts” offering (the “Offering”) on October 18, 2012, which concluded on October 16, 2015. The Company sold 33,534,022 shares of common stock generating gross proceeds of $834,399 from the Offering. On March 29, 2017, the Company’s board of directors determined an estimated per share net asset value (the “Estimated Per Share NAV”) of the Company’s common stock of $22.63 ($9.05 prior to the Reverse Stock Split). The previously estimated per share net asset value of $22.55 ($9.02 prior to the Reverse Stock Split) was established on April 7, 2016. The Company provides the following programs to facilitate additional investment in the Company’s shares and to provide limited liquidity for stockholders. Distribution Reinvestment Plan On October 19, 2015, the Company registered 25,000,000 shares of common stock to be issued under its distribution reinvestment plan (“DRP”) pursuant to a registration statement on Form S-3D. The Company provides stockholders with the option to purchase additional shares from the Company by automatically reinvesting cash distributions through the DRP, subject to certain share ownership restrictions. The Company does not pay any selling commissions or a marketing contribution and due diligence expense allowance in connection with the DRP. Pursuant to the DRP, the price per share for shares of common stock purchased under the DRP is equal to the estimated value of a share, as determined by the Company’s board of directors and reported by the Company from time to time, until the shares become listed for trading, if a listing occurs, assuming that the DRP has not been terminated or suspended in connection with such listing. On March 30, 2017, the Company reported a new Estimated Per Share NAV of $22.63 ($9.05 prior to the Reverse Stock Split). Distributions reinvested through the DRP were approximately $27,069, $27,831 and $20,828 for the years ended December 31, 2017, 2016 and 2015, respectively. Share Repurchase Program The Company adopted a share repurchase program effective October 18, 2012 which was subsequently amended effective January 1, 2018 to change the processing of repurchase requests from a monthly to a quarterly basis to align with the move to quarterly distributions. Under the amended and restated share repurchase program (“SRP”), the Company is authorized to purchase shares from stockholders who purchased their shares from the Company or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested, if the Company chooses to purchase them. Subject to funds being available, the Company limits the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year, as adjusted by the Reverse Stock Split. Funding for the SRP comes from proceeds the Company receives from the DRP during the same period. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, the one year holding period does not apply. The SRP will immediately terminate if the Company’s shares become listed for trading on a national securities exchange. In addition, the Company’s board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP. Pursuant to the SRP, the Company may repurchase shares at prices ranging from 92.5% of the “share price,” as defined in the SRP, for stockholders who have owned shares for at least one year to 100% of the “share price” for stockholders who have owned shares for at least four years. For repurchases sought upon a stockholder’s death or qualifying disability, the Company may repurchase shares at a price equal to 100% of the “share price.” As used in the SRP, “share price” means the lesser of (1) the offering price of the Company’s shares in the Offering (unless the shares were purchased at a discount from that price, and then that purchase price), as adjusted by the Reverse Stock Split, reduced by any distributions of net sale proceeds that the Company designates as constituting a return of capital; or (2) the most recently disclosed estimated value per share. Repurchases through the SRP were approximately $21,066, $9,724 and $3,810 for the years ended December 31, 2017, 2016 and 2015, respectively. At December 31, 2017 and 2016, the liability related to the SRP was $2,530 and $1,448, respectively, recorded in other liabilities on the Company’s consolidated balance sheets.
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Acquisitions |
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| Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisitions | NOTE 4 – ACQUISITIONS 2017 Acquisitions During the year ended December 31, 2017, the Company acquired, through its wholly owned subsidiaries, the three properties listed below from unaffiliated third parties. The acquisitions were financed with proceeds from the Company’s credit facility (the “Credit Facility”).
The above acquisitions were accounted for as asset acquisitions. For the year ended December 31, 2017, the Company incurred $2,213 of total acquisition costs and fees, $1,459 of which are capitalized as the acquisition of net investment properties in the accompanying consolidated balance sheets. An adjustment to the deferred investment property acquisition obligation of $574 and $180 of acquisition and dead deal costs are included in acquisition related costs in the accompanying consolidated statements of operations and comprehensive loss.
2016 Acquisitions During the year ended December 31, 2016, the Company acquired, through its wholly owned subsidiaries, the two properties listed below and financed Coastal North Town Center by obtaining a mortgage loan in the amount of $43,680.
For the year ended December 31, 2016, the Company recorded a reduction in deferred investment property acquisition obligation of $2,066, net of acquisition costs of $510 in acquisition related costs in the consolidated statements of operations and comprehensive loss. The Company incurred $13,903 for the year ended December 31, 2015, of acquisition, dead deal and transaction related costs that were related to both closed and potential transactions and deferred obligation adjustments. These costs include third party due diligence costs such as appraisals, environmental studies, and legal fees as well as acquisition fees and time and travel expense reimbursements to the Sponsor and its affiliates. For the year ended December 31, 2015, the Business Manager permanently waived acquisition fees of $2,510. No fees were waived for 2017 or 2016. For properties acquired during the year ended December 31, 2017, the Company recorded total income of $5,202 and property net income of $325, which excludes expensed acquisition related costs. For properties acquired during the year ended December 31, 2016, the Company recorded total income of $4,218 and property net income of $269, which excludes expensed acquisition related costs. The following table presents certain additional information regarding the Company’s acquisitions during the years ended December 31, 2017 and 2016. The amounts recognized for major assets acquired and liabilities assumed as of the acquisition date are as follows:
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Investment in Unconsolidated Entities |
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| Equity Method Investments And Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment in Unconsolidated Entities | NOTE 5 – INVESTMENT IN UNCONSOLIDATED ENTITIES
The following table summarizes the Company’s unconsolidated joint ventures:
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Acquired Intangible Assets and Liabilities |
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| Goodwill And Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquired Intangible Assets and Liabilities | NOTE 6 – ACQUIRED INTANGIBLE ASSETS AND LIABILITIES The following table summarizes the Company’s identified intangible assets and liabilities as of December 31, 2017 and 2016:
As of December 31, 2017, the weighted average amortization periods for acquired in-place lease, above market lease intangibles, below market lease intangibles and above market ground lease are 10, 14, 19 and 55 years, respectively. The portion of the purchase price allocated to acquired above market lease value and acquired below market lease value is amortized on a straight-line basis over the term of the related lease as an adjustment to rental income. For below market lease values, the amortization period includes any renewal periods with fixed rate renewals. The acquired above market ground lease is amortized on a straight-line basis as an adjustment to property operating expense over the term of the lease and includes renewal periods. The portion of the purchase price allocated to acquired in-place lease value is amortized on a straight-line basis over the acquired leases’ weighted average remaining term. Amortization pertaining to acquired in-place lease value, above market ground lease, above market lease value and below market lease value is summarized below:
Estimated amortization of the respective intangible lease assets and liabilities as of December 31, 2017 for each of the five succeeding years and thereafter is as follows:
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Debt and Derivative Instruments |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt and Derivative Instruments | NOTE 7 – DEBT AND DERIVATIVE INSTRUMENTS As of December 31, 2017 and 2016, the Company had the following mortgages and credit facility payable:
The Company’s indebtedness bore interest at a weighted average interest rate of 3.63% per annum at December 31, 2017, which includes the effects of interest rate swaps. The Company estimates the fair value of its total debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by the Company’s lenders using Level 3 inputs. The carrying value of the Company’s debt excluding mortgage premium and unamortized debt issuance costs was $693,321 and $607,836 as of December 31, 2017 and 2016, respectively, and its estimated fair value was $684,621 and $595,404 as of December 31, 2017 and 2016, respectively. As of December 31, 2017, scheduled principal payments and maturities on the Company’s debt were as follows:
Credit Facility Payable
The Company’s Credit Facility in the amount of $110,000 has an accordion feature that allows for an increase in available borrowings up to $400,000, subject to certain conditions. The Credit Facility matures on September 30, 2019 and the Company has a one year extension option which it may exercise as long as certain conditions are met.
At December 31, 2017, the interest rate on the Credit Facility was 3.21%. As of December 31, 2017, the Company had $26,200 available for borrowing under the Credit Facility.
The Credit Facility requires compliance with certain covenants, as amended, including a minimum tangible net worth requirement, a distribution limitation, restrictions on indebtedness and investment restrictions, as defined. It also contains customary default provisions including the failure to comply with the Company's covenants and the failure to pay when amounts outstanding under the Credit Facility become due. The Company is in compliance with all financial covenants related to the Credit Facility. Mortgages Payable The mortgage loans require compliance with certain covenants, such as debt service ratios, investment restrictions and distribution limitations. As of December 31, 2017, the Company was current on all of the payments and in compliance with all financial covenants. All of the Company’s mortgage loans are secured by first mortgages on the respective real estate assets. As of December 31, 2017, the weighted average years to maturity for the Company’s mortgages payable was approximately 4.2 years. Interest Rate Swap Agreements The Company entered into interest rate swaps to fix certain of its floating LIBOR based debt under variable rate loans to a fixed rate to manage its risk exposure to interest rate fluctuations. The Company will generally match the maturity of the underlying variable rate debt with the maturity date on the interest swap. See Note 15 - "Fair Value Measurements" for further information. The following table summarizes the Company’s interest rate swap contracts outstanding as of December 31, 2017.
For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the unrealized gain or loss on the derivative is reported as a component of comprehensive income (loss). The ineffective portion of the change in fair value, if any, is recognized directly in earnings. The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive loss for the years ended December 31, 2017, 2016 and 2015.
The amount that is expected to be reclassified from accumulated other comprehensive income into income in the next twelve months is approximately ($124).
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Equity-Based Compensation |
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| Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-Based Compensation | NOTE 8 – EQUITY-BASED COMPENSATION Under the Company’s Employee and Director Restricted Share Plan (“RSP”), restricted shares and restricted share units generally vest over a one to three year vesting period from the date of the grant, subject to the specific terms of the grant. On June 13, 2017, we issued 1,326 restricted shares and 442 restricted share units to our independent directors pursuant to the automatic grant provisions of the RSP, which become vested in equal installments of 33-1/3% on each of the first three anniversaries of June 13, 2017, subject to certain exceptions. On October 2, 2017, we issued 331 restricted shares and 110 restricted share units to our independent directors pursuant to the RSP, which become vested in equal installments of 33-1/3% on each of the first three anniversaries of October 2, 2017, subject to certain exceptions. Each restricted share and restricted share unit entitle the holder to receive one common share when it vests. Restricted shares and restricted share units are included in common stock outstanding on the date of vesting. The grant-date value of the restricted shares and restricted share units is amortized over the vesting period representing the requisite service period. Compensation expense associated with the restricted shares and restricted share units issued to the non-employee directors was $33 and $14, in the aggregate, for the year ended December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, the Company had $44 and $26, respectively, of unrecognized compensation expense related to the unvested restricted shares and restricted share units, in the aggregate. The weighted average remaining period that compensation expense related to unvested restricted shares and restricted share units will be recognized is 1.5 years. A summary table of the status of the restricted shares and restricted share units is presented below:
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Income Tax and Distributions |
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| Income Tax And Distributions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax and Distributions | NOTE 9 – INCOME TAX AND DISTRIBUTIONS The Company paid distributions based on daily record dates, payable in arrears the following month, equal to a daily amount of $0.00410959 per share, based upon a 365-day period for 2017 and 2015. The Company paid distributions based on daily record dates, payable in arrears the following month, equal to a daily amount of $0.00409836 per share, based upon a 366-day period for 2016. The table below presents the distributions paid and declared for the years ended December 31, 2017, 2016 and 2015.
For federal income tax purposes, distributions may consist of ordinary dividend income, qualified dividend income, non-taxable return of capital, capital gains or a combination thereof. Distributions to the extent of the Company’s current and accumulated earnings and profits for federal income tax purposes are taxable to the recipient as either ordinary dividend income or, if so declared by the Company, qualified dividend income or capital gain dividends. Distributions in excess of these earnings and profits (calculated for income tax purposes) constitute a non-taxable return of capital rather than ordinary dividend income or a capital gain distribution and reduce the recipient’s tax basis in the shares to the extent thereof. Distributions in excess of earnings and profits that reduce a recipient’s tax basis in the shares have the effect of deferring taxation of the amount of the distribution until the sale of the stockholder’s shares. If the recipient's tax basis is reduced to zero, distributions in excess of the aforementioned earnings and profits (calculated for income tax purposes) constitute taxable gain. In order to maintain the Company’s status as a REIT, the Company must annually distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to its stockholders. For the years ended December 31, 2017, 2016 and 2015, the Company’s taxable income was $10,045 (unaudited), $9,890 (unaudited) and $13,123 (unaudited), respectively. The following table sets forth the taxability of distributions on common shares, on a per share basis, paid in 2017, 2016 and 2015:
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Earnings (Loss) per Share |
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Dec. 31, 2017 | |
| Earnings Per Share [Abstract] | |
| Earnings (Loss) per Share | NOTE 10 – EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share (“EPS”) are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (the “common shares”). Diluted EPS is computed by dividing net income (loss) by the common shares plus common share equivalents. The Company excludes antidilutive restricted shares and units from the calculation of weighted-average shares for diluted EPS. As a result of a net loss for the year ended December 31, 2017 and 2016, 1,507 shares and 1,214 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive. As of December 31, 2015, the Company did not have any dilutive common share equivalents outstanding. |
Commitments and Contingencies |
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| Commitments And Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | NOTE 11 – COMMITMENTS AND CONTINGENCIES The acquisition of certain of the Company’s properties included an earnout component to the purchase price that was recorded as a deferred investment property acquisition obligation (“Earnout liability”). The maximum potential earnout payment was $2,040 at December 31, 2017. The table below presents the change in the Company’s Earnout liability for the years ended December 31, 2017 and 2016.
The Company may be subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the consolidated financial statements of the Company.
In conjunction with its equity investment in the Mainstreet JV, the Company also agreed to provide subsidiaries of the Mainstreet JV mezzanine loans, in the aggregate amount of approximately $5,400. The loan term is for 48 months. The Company will earn interest at a rate of 14.5% per annum and will receive monthly interest payments based on a 10% pay rate. The remaining unpaid interest will be due at maturity or upon certain defined events. The mezzanine loans are guaranteed by one of the other members of the joint venture. The borrowers may draw on the mezzanine loans from time to time in connection with the construction of the rapid recovery healthcare facilities and are not expected to draw on the mezzanine loans until such time as the Company has fully funded its equity commitment to the Mainstreet JV. At December 31, 2017, the Company has not loaned any funds related to the mezzanine loans. |
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Segment Reporting |
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Dec. 31, 2017 | |
| Segment Reporting [Abstract] | |
| Segment Reporting | NOTE 12 – SEGMENT REPORTING The Company has one reportable segment, retail real estate, as defined by U.S. GAAP for the years ended December 31, 2017, 2016 and 2015. |
Transactions with Related Parties |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Transactions With Related Parties | NOTE 13 – TRANSACTIONS WITH RELATED PARTIES The Company was a member of a limited liability company formed as an insurance association captive, which was owned by the Company, IRC Retail Centers LLC, InvenTrust Properties Corp. and Retail Properties of America, Inc. The Company recorded its investment in investment in unconsolidated entities in the accompanying consolidated balance sheets. The Company’s share of net income from its investment was based on the ratio of each member’s premium contribution to the venture. The Company received its original capital investment of $100 and was allocated income of $21, income of $252 and a loss of $118 for the years ended December 31, 2017, 2016 and 2015, respectively. The Captive terminated its operations in March 2016 and dissolved in the fourth quarter of 2017 after all regulatory reports were filed. However, there is no assurance the Company will not be liable for any additional proportional costs associated with the termination of the Captive which have not been previously identified and paid. The Company owns 1,000 shares of common stock in The Inland Real Estate Group of Companies, Inc. with a recorded value of $1 at December 31, 2017, 2016 and 2015. This amount is included in other assets in the accompanying consolidated balance sheets. The following table summarizes the Company’s related party transactions for the years ended December 31, 2017, 2016 and 2015. Certain compensation and fees payable to the Business Manager for services to be provided to the Company are limited to maximum amounts.
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Operating Leases |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Operating Leases | NOTE 14 – OPERATING LEASES Minimum lease payments to be received under operating leases including ground leases, as of December 31, 2017 for the years indicated, assuming no expiring leases are renewed, are as follows:
The remaining lease terms range from less than one year to 19 years. Most of the revenue from the Company’s properties consists of rents received under long-term operating leases. Most leases require the tenant to pay fixed base rent paid monthly in advance, and to reimburse the Company for the tenant’s pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the Company and recoverable under the terms of the lease. Under these leases, the Company pays all expenses and is reimbursed by the tenant for the tenant’s pro rata share of recoverable expenses paid.
Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the consolidated statements of operations and comprehensive loss. Under leases where all expenses are paid by the Company, subject to reimbursement by the tenant, the expenses are included within property operating expenses and reimbursements are included in tenant recovery income on the consolidated statements of operations and comprehensive loss.
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Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | NOTE 15 – FAIR VALUE MEASUREMENTS Fair Value Hierarchy The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Recurring Fair Value Measurements For assets and liabilities measured at fair value on a recurring basis, the table below presents the fair value of the Company’s cash flow hedges as well as their classification on the consolidated balance sheets as of December 31, 2017 and 2016, respectively.
The fair value of derivative instruments was estimated based on data observed in the forward yield curve which is widely observed in the marketplace. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the counterparty's nonperformance risk in the fair value measurements which utilize Level 3 inputs, such as estimates of current credit spreads. The Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative interest rate swap agreements and therefore has classified these in Level 2 of the hierarchy. Non-recurring Fair Value Measurements The table below presents activity for the Company’s assets measured at fair value on a non-recurring basis. The Company recognized an impairment charge to reflect an investment at its estimated fair value for the year ended December 31, 2017, which is included in provision for impairment of investment property on the accompanying consolidated statements of operations and comprehensive loss. During the years ended December 31, 2016 and 2015, the Company incurred no impairment charges.
As of December 31, 2017, the Company identified indicators of impairment at one of its investment properties. Such indicators included a low occupancy rate, difficulty in leasing space, declining market rents and the related cost of re-leasing. The fair value of this investment property was estimated using the 10-year discounted cash flow model, which includes estimated inflows and outflows over a specific holding period and estimated net disposition proceeds at the end of the 10-year period. The Company utilized a capitalization rate of 7.50% and a discount rate of 8.50% which it believes are reasonable based on current market rates. |
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Quarterly Supplemental Financial Information |
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| Quarterly Supplemental Financial Information | NOTE 16 – QUARTERLY SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) The following represents the results of operations, for each quarterly period, during 2017 and 2016.
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Schedule - Schedule III Real Estate and Accumulated Depreciation |
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| Real Estate And Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule III Real Estate and Accumulated Depreciation | INLAND REAL ESTATE INCOME TRUST, INC. Schedule III Real Estate and Accumulated Depreciation December 31, 2017 (Dollar amounts in thousands)
Notes:
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||
| General | General The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In the opinion of management, all adjustments necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods are presented. Actual results could differ from those estimates. Information with respect to square footage and occupancy is unaudited. |
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| Consolidation | Consolidation The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly owned subsidiaries. Wholly owned subsidiaries generally consist of limited liability companies (“LLCs”). All intercompany balances and transactions have been eliminated in consolidation. Each property is owned by a separate legal entity which maintains its own books and financial records and each entity’s assets are not available to satisfy the liabilities of other affiliated entities. The fiscal year-end of the Company is December 31. |
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| Acquisitions | Acquisitions Upon acquisition of real estate investment properties, the Company allocates the total purchase price of each property that is accounted for as an asset acquisition based on the relative fair value of the tangible and intangible assets acquired and liabilities assumed based on Level 3 inputs, such as comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions, from a third party appraisal or other market sources. The acquisition date is the date on which the Company obtains control of the real estate investment property and transaction costs are capitalized. Assets and liabilities acquired typically include land, building and site improvements and identified intangible assets and liabilities, consisting of the value of above market and below market leases and the value of in-place leases. The portion of the purchase price allocated to above market lease values are included in acquired lease intangible assets, net and is amortized on a straight-line basis over the term of the related lease as a reduction to rental income. The portion allocated to below market lease values are included in acquired intangible liabilities, net and is amortized as an increase to rental income over the term of the lease including any renewal periods with fixed rate renewals. The portion of the purchase price allocated to acquired in-place lease value is included in acquired lease intangible assets, net and is amortized on a straight-line basis over the acquired leases’ weighted average remaining term. The Company determines the fair value of the tangible assets consisting of land and buildings by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and buildings. The Company determines the fair value of assumed debt by calculating the net present value of the mortgage payments using interest rates for debt with similar terms and maturities. Differences between the fair value and the stated value is recorded as a discount or premium and amortized over the remaining term using the effective interest method. Certain of the Company’s properties included earnout components to the purchase price, meaning the Company did not pay a portion of the purchase price of the property at closing, although the Company owns the entire property. The Company is not obligated to settle the contingent portion of the purchase price unless space which was vacant at the time of acquisition is later leased by the seller within the time limits and parameters set forth in the related acquisition agreements. The Company’s policy is to record earnout components when estimable and probable. In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance that clarified the definition of a business and assists in the evaluation of whether a transaction should be accounted for as an acquisition of an asset or a business combination. The Company early adopted the new guidance and modified its accounting policy effective October 1, 2016. Prior to October 1, 2016, the Company expensed all acquisition expenses as incurred whether or not the acquisition was completed, and assets acquired and liabilities assumed were measured at their fair values rather than at their relative fair values as described above. Additionally, earnouts were recorded as additional purchase price of the related property and as a liability included in deferred investment property acquisition obligations on the accompanying consolidated balance sheets. The amount recorded was based on the Company’s best estimate of the potential future earnout payments at the date of an acquisition. The Company recorded the effect of changes in the underlying liability assumptions in acquisition related costs on the accompanying consolidated statements of operations and comprehensive loss. |
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| Impairment of Investment Properties | Impairment of Investment Properties The Company assesses the carrying values of its respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Recoverability of the assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. In order to review its assets for recoverability, the Company considers current market conditions, as well as its intent with respect to holding or disposing of the asset. If the Company’s analysis indicates that the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, the Company recognizes an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate property. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third party appraisals, where considered necessary (Level 3 inputs). The Company estimates the future undiscounted cash flows based on management’s intent as follows: (i) for real estate properties that the Company intends to hold long-term, including land held for development, properties currently under development and operating buildings, recoverability is assessed based on the estimated future net rental income from operating the property and termination value; and (ii) for real estate properties that the Company intends to sell, including land parcels, properties currently under development and operating buildings, recoverability is assessed based on estimated net proceeds, including net rental income during the holding period, from disposition that are estimated based on future net rental income of the property and utilizing expected market capitalization rates. The use of projected future cash flows is based on assumptions that are consistent with our estimates of future expectations and the strategic plan the Company uses to manage its underlying business. However, assumptions and estimates about future cash flows, including comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions which impact the discounted cash flow approach to determining value are complex and subjective. Changes in economic and operating conditions and the Company’s ultimate investment intent that occur subsequent to the impairment analysis could impact these assumptions and result in future impairment charges of real estate properties. During the year ended December 31, 2017, the Company recorded an impairment charge of $8,530 which is included in provision for impairment of investment property on the accompanying consolidated statements of operations and comprehensive loss. During the years ended December 31, 2016 and 2015, the Company incurred no impairment charges. |
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| REIT Status | REIT Status The Company has qualified and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ended December 31, 2013. As a result, the Company generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income (subject to certain adjustments and excluding any net capital gain) to its stockholders. The Company will monitor the business and transactions that may potentially impact its REIT status. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income. |
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| Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all demand deposits, money market accounts and all short term investments with a maturity of three months or less, at the date of purchase, to be cash equivalents. The account balance may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions’ non-performance. |
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| Valuation of Accounts and Rents Receivable | Valuation of Accounts and Rents Receivable The Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability factors taken into consideration are the amounts outstanding and payment history of the tenant, which taken as a whole determines the valuation. Allowances are taken for those balances that the Company deems to be uncollectible, including any amounts relating to straight-line income receivables. |
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| Capitalization and Depreciation | Capitalization and Depreciation Real estate acquisitions are recorded at cost less accumulated depreciation. Improvement and betterment costs are capitalized, and ordinary repairs and maintenance are expensed as incurred. Cost capitalization and the estimate of useful lives require judgment and include significant estimates that can and do change. Depreciation expense is computed using the straight-line method. The Company anticipates the estimated useful lives of its assets by class to be generally:
Depreciation expense was approximately $39,497, $35,086 and $21,309 for the years ended December 31, 2017, 2016 and 2015, respectively.
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| Partially-Owned Entities | Partially-Owned Entities The Company will consolidate the operations of a joint venture if the Company determines that it is either the primary beneficiary of a variable interest entity (VIE) or has substantial influence and control of the entity. In instances where the Company determines that it is not the primary beneficiary of a VIE or the Company does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Company will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Company’s operations but instead its share of operations will be reflected as equity in earnings (loss) of unconsolidated entity on its consolidated statements of operations and comprehensive loss. Additionally, the Company’s net investment in the joint venture will be reflected as investment in unconsolidated entity on the consolidated balance sheets. |
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| Debt Issuance Costs | Debt Issuance Costs Debt issuance costs are amortized on a straight-line basis, which approximates the effective interest method, over the term, or anticipated repayment date, of the related agreements as a component of interest expense. These costs are reported as a direct deduction to the Company’s outstanding mortgages and credit facility payable. The adoption of Accounting Standards Update (“ASU”) No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt issuance Costs issued by the FASB resulted in the reclassification of $4,467 from deferred expenses, net to mortgages and credit facility payable, net on the consolidated balance sheets as of December 31, 2015. |
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| Fair Value Measurements | Fair Value Measurements The Company has estimated fair value using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition. The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
The Company’s cash equivalents, accounts receivable and payables and accrued expenses all approximate fair value due to the short term nature of these financial instruments. The Company’s financial instruments measured on a recurring basis include derivative interest rate instruments. |
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| Derivatives | Derivatives The Company uses derivative instruments, such as interest rate swaps, primarily to manage exposure to interest rate risks inherent in variable rate debt. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. The Company’s interest rate swaps involve the receipt of variable-rate 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. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date. The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedging instruments under the accounting requirements for derivatives and hedging. |
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| Revenue Recognition | Revenue Recognition The Company commences revenue recognition on its leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of, or controls the physical use of, the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If the Company is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If the Company concludes it is not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded by the Company under the lease are treated as lease incentives which reduce revenue recognized over the term of the lease. In these circumstances, the Company begins revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. The Company considers a number of different factors to evaluate whether it or the lessee is the owner of the tenant improvements for accounting purposes. Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rent receivable in the accompanying consolidated balance sheets. Due to the impact of the straight-line basis, rental income generally will be greater than the cash collected in the early years and will decrease in the later years of a lease. Reimbursements from tenants for recoverable real estate tax and operating expenses are accrued as revenue in the period the applicable expenses are incurred. The Company makes certain assumptions and judgments in estimating the reimbursements at the end of each reporting period. The Company does not expect the actual results to materially differ from the estimated reimbursement. The Company records lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and amounts due are considered collectible. Upon early lease termination, the Company provides for gains or losses related to unrecovered intangibles and other assets. As a lessor, the Company defers the recognition of contingent rental income, such as percentage rent, until the specified target that triggered the contingent rental income is achieved. |
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| Equity-Based Compensation | Equity-Based Compensation The Company has restricted shares and units outstanding at December 31, 2017 and 2016. The Company recognizes expense related to the fair value of equity-based compensation awards as general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss. The Company primarily recognizes expense based on the fair value at the grant date on a straight-line basis over the vesting period representing the requisite service period. See Note 8 - "Equity-Based Compensation" for further information. |
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. The update, among other things,
The amendment is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the update. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this update. The amended presentation and disclosure guidance is required only prospectively. The Company continues to evaluate ASU No. 2017-12 to determine the impact on its consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new update will require that amounts described as restricted cash and restricted cash equivalents be included in beginning and ending-of-period reconciliation cash shown on the statement of cash flows. The amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. At December 31, 2017, restricted cash of $4,940 was recorded as other assets on the Company’s consolidated balance sheets and the Company does not believe that the adoption of ASU No. 2016-18 will have a material impact on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issues addressed in the new guidance include the cash flow classification of: debt prepayment and debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investments, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The standard will be effective for fiscal years beginning after December 15, 2017, for public companies. The Company intends to adopt the new accounting standard by making a policy election to classify distributions received from an equity method investee as operating cash inflows up to its cumulative equity in earnings and any excess as investing inflows. The Company does not believe that ASU No. 2016-15 will have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating. 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. 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 No. 2016-02 supersedes the previous leases standard, Leases (Topic 840). The Company has identified its lease revenues and non-lease revenues under the guidance. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company expects to adopt the guidance on a modified retrospective basis and upon adoption of the Leases guidance, non-lease components of new, extended or modified leases, including common area maintenance reimbursements, will be accounted for under the Revenue from Contracts with Customers guidance as described below. The Company is also the lessee under a ground lease, which it will be required to recognize right of use asset and a related lease liability on its consolidated balance sheets upon adoption. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, although it will not affect the accounting for rental related revenues. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. The Company anticipates selecting the modified retrospective transition method with a cumulative effect recognized as of the date of adoption and will adopt the new standard effective January 1, 2018, when effective. The Company has evaluated the specific revenue streams that could be most significantly impacted by this ASU and expects that the revenue recognition from these activities and other miscellaneous income will be generally consistent with current recognition methods, and therefore does not expect material changes to the consolidated financial statements as a result of adoption. The Company’s remaining implementation items include calculating the cumulative effect adjustment, if any, to be recorded upon adoption, drafting revised disclosures in accordance with the new standard and implementing changes to internal control policies and procedures, if any. Common area maintenance reimbursements to be impacted by ASU No. 2014-09 will not be addressed until the Company's adoption of ASU No. 2016-02, considering its revisions to accounting for common area maintenance described above.
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | ||||||||||||||||
| Schedule of Estimated Useful Lives of Assets | Cost capitalization and the estimate of useful lives require judgment and include significant estimates that can and do change. Depreciation expense is computed using the straight-line method. The Company anticipates the estimated useful lives of its assets by class to be generally:
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Acquisitions (Tables) |
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| Schedule of Major Assets Acquired and Liabilities Assumed | The following table presents certain additional information regarding the Company’s acquisitions during the years ended December 31, 2017 and 2016. The amounts recognized for major assets acquired and liabilities assumed as of the acquisition date are as follows:
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| 2017 Acquisitions [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Acquisitions | 2017 Acquisitions During the year ended December 31, 2017, the Company acquired, through its wholly owned subsidiaries, the three properties listed below from unaffiliated third parties. The acquisitions were financed with proceeds from the Company’s credit facility (the “Credit Facility”).
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| 2016 Acquisitions [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Acquisitions | 2016 Acquisitions During the year ended December 31, 2016, the Company acquired, through its wholly owned subsidiaries, the two properties listed below and financed Coastal North Town Center by obtaining a mortgage loan in the amount of $43,680.
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Investment in Unconsolidated Entities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Method Investments And Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Unconsolidated Joint Ventures | The following table summarizes the Company’s unconsolidated joint ventures:
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Acquired Intangible Assets and Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill And Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets and Liabilities | The following table summarizes the Company’s identified intangible assets and liabilities as of December 31, 2017 and 2016:
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| Schedule of Amortization of Acquired In Place Lease Value, Above Market Ground Lease, Above and Below Market Lease Values | Amortization pertaining to acquired in-place lease value, above market ground lease, above market lease value and below market lease value is summarized below:
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| Schedule of Estimated Amortization of Intangible Lease Assets and Liabilities | Estimated amortization of the respective intangible lease assets and liabilities as of December 31, 2017 for each of the five succeeding years and thereafter is as follows:
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Debt and Derivative Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Mortgages and Credit Facilities Payable | As of December 31, 2017 and 2016, the Company had the following mortgages and credit facility payable:
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| Schedule of Principal Payments and Maturities of Company's Debt | As of December 31, 2017, scheduled principal payments and maturities on the Company’s debt were as follows:
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| Summary of Interest Rate Swap Contracts Outstanding | The following table summarizes the Company’s interest rate swap contracts outstanding as of December 31, 2017.
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| Schedule of Derivative Financial Instruments on Consolidated Statements of Operations and Other Comprehensive Loss | The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive loss for the years ended December 31, 2017, 2016 and 2015.
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Equity-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Restricted Shares and Restricted Share Units | A summary table of the status of the restricted shares and restricted share units is presented below:
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Income Tax and Distributions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax And Distributions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Distributions Paid and Declared | The table below presents the distributions paid and declared for the years ended December 31, 2017, 2016 and 2015.
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| Declared Monthly Distribution to its Common Stockholders | The following table sets forth the taxability of distributions on common shares, on a per share basis, paid in 2017, 2016 and 2015:
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Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments And Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Change in Earnout Liability for Acquisition of Certain Properties | The table below presents the change in the Company’s Earnout liability for the years ended December 31, 2017 and 2016.
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Transactions with Related Parties (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Transactions | The following table summarizes the Company’s related party transactions for the years ended December 31, 2017, 2016 and 2015. Certain compensation and fees payable to the Business Manager for services to be provided to the Company are limited to maximum amounts.
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Operating Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Schedule of Future Minimum Lease Payments to be Received Under Operating Leases | Minimum lease payments to be received under operating leases including ground leases, as of December 31, 2017 for the years indicated, assuming no expiring leases are renewed, are as follows:
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Assets and Liabilities Measures at Fair Value on a Recurring Basis | For assets and liabilities measured at fair value on a recurring basis, the table below presents the fair value of the Company’s cash flow hedges as well as their classification on the consolidated balance sheets as of December 31, 2017 and 2016, respectively.
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| Schedule of Assets Measured at Fair Value on a Non-Recurring Basis | The table below presents activity for the Company’s assets measured at fair value on a non-recurring basis. The Company recognized an impairment charge to reflect an investment at its estimated fair value for the year ended December 31, 2017, which is included in provision for impairment of investment property on the accompanying consolidated statements of operations and comprehensive loss.
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Quarterly Supplemental Financial Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarterly supplemental financial information - unaudited | The following represents the results of operations, for each quarterly period, during 2017 and 2016.
|
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Organization (Narrative) (Details) |
12 Months Ended | |
|---|---|---|
Jan. 16, 2018 |
Dec. 31, 2017
ft²
Property
State
|
|
| Organization [Line Items] | ||
| Number of retail properties owned | Property | 59 | |
| Square footage of real estate properties owned | ft² | 6,860,923 | |
| Number of states in which company owns real estate properties | State | 24 | |
| Weighted average physical occupancy rate of property portfolio | 93.90% | |
| Weighted average economic occupancy rate of property portfolio | 94.80% | |
| Description of reverse stock split | On January 16, 2018, the Company effected a 1-for-2.5 reverse stock split of its issued and outstanding common stock whereby every 2.5 shares of issued and outstanding common stock were converted into one share of its common stock (the “Reverse Stock Split”). In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), all share information presented has been retroactively adjusted to reflect the Reverse Stock Split. | |
| Subsequent Event [Member] | ||
| Organization [Line Items] | ||
| Reverse stock, split ratio | 0.4 |
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Impairment charges | $ 8,530,000 | $ 0 | $ 0 |
| Depreciation expense | 39,497,000 | 35,086,000 | 21,309,000 |
| Deferred costs, net | 1,317,000 | $ 683,000 | |
| Other Assets [Member] | |||
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Restricted cash | $ 4,940,000 | ||
| Accounting Standards Update 2015-03 | |||
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Deferred costs, net | $ 4,467,000 | ||
Acquisitions (Schedule of Major Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
[1] | ||
|---|---|---|---|---|---|
| Business Combinations [Abstract] | |||||
| Land | $ 17,513 | $ 15,128 | |||
| Building and improvements | 41,793 | 53,849 | |||
| Acquired lease intangible assets, net | 15,385 | 13,848 | |||
| Acquired intangible liabilities, net | (4,589) | (3,432) | |||
| Assumed liabilities, net | (149) | (359) | |||
| Total | $ 69,953 | $ 79,034 | |||
| |||||
Acquisitions (Schedule of Major Assets Acquired and Liabilities Assumed) (Parenthetical) (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
ft²
|
Dec. 31, 2016
USD ($)
ft²
|
|||
|---|---|---|---|---|---|
| Business Acquisition [Line Items] | |||||
| Property acquisition, Purchase Price | $ | $ 69,953 | $ 79,034 | [1] | ||
| Property acquisition, Square Footage | ft² | 6,860,923 | ||||
| Oquirrh Mountain Marketplace [Member] | |||||
| Business Acquisition [Line Items] | |||||
| Property acquisition, Purchase Price | $ | $ 1,720 | ||||
| Property acquisition, Square Footage | ft² | 4,200 | ||||
| Park Avenue Shopping Center [Member] | |||||
| Business Acquisition [Line Items] | |||||
| Property acquisition, Purchase Price | $ | $ 533 | ||||
| Property acquisition, Square Footage | ft² | 1,766 | ||||
| |||||
Schedule of Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|||||
|---|---|---|---|---|---|---|---|
| Schedule Of Equity Method Investments [Line Items] | |||||||
| Investment in unconsolidated entities | $ 7,125 | $ 126 | |||||
| Mainstreet Texas Development Fund, LLC ("Mainstreet JV") [Member] | |||||||
| Schedule Of Equity Method Investments [Line Items] | |||||||
| Company's Profit/Loss Allocation | [1] | 83.00% | |||||
| Remaining Commitment | [1] | $ 1,783 | |||||
| Investment in unconsolidated entities | [1] | $ 7,125 | |||||
| Oak Property Casualty, LLC ("Captive") [Member] | |||||||
| Schedule Of Equity Method Investments [Line Items] | |||||||
| Investment in unconsolidated entities | [2] | $ 126 | |||||
| |||||||
Schedule of Unconsolidated Joint Ventures (Parenthetical) (Details) $ in Thousands |
Aug. 31, 2017
USD ($)
|
|---|---|
| Mainstreet Texas Development Fund, LLC ("Mainstreet JV") [Member] | |
| Schedule Of Equity Method Investments [Line Items] | |
| Investment balance includes capitalized acquisition, interest and legal costs | $ 157 |
Schedule of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Intangible assets: | ||
| Accumulated amortization | $ (72,348) | $ (46,750) |
| Acquired lease intangibles, net | 138,658 | 150,108 |
| Intangible liabilities: | ||
| Acquired below market lease value | 71,551 | 66,962 |
| Above market ground lease | 5,169 | 5,169 |
| Accumulated amortization | (14,450) | (8,657) |
| Acquired below market lease intangibles, net | 62,270 | 63,474 |
| Acquired in-place lease value [Member] | ||
| Intangible assets: | ||
| Acquired intangible assets | 165,182 | 159,679 |
| Acquired lease intangibles, net | 104,298 | |
| Acquired above market lease value [Member] | ||
| Intangible assets: | ||
| Acquired intangible assets | 45,824 | $ 37,179 |
| Acquired lease intangibles, net | $ 34,360 |
Acquired Intangible Assets and Liabilities - Narrative (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| Acquired in-place lease value [Member] | |
| Acquired Finite Lived Intangible Assets [Line Items] | |
| Intangible liabilities, weighted average amortization period | 10 years |
| Acquired above market lease value [Member] | |
| Acquired Finite Lived Intangible Assets [Line Items] | |
| Intangible liabilities, weighted average amortization period | 14 years |
| Acquired below market lease value [Member] | |
| Acquired Finite Lived Intangible Assets [Line Items] | |
| Intangible liabilities, weighted average amortization period | 19 years |
| Acquired Above market ground lease [Member] | |
| Acquired Finite Lived Intangible Assets [Line Items] | |
| Intangible liabilities, weighted average amortization period | 55 years |
Schedule of Amortization Pertaining to Acquired in Place Lease Value, Above Market Ground Lease, Above Market Lease Value and Below Market Lease Value (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Amortization recorded as a (reduction) increase to rental income | $ 1,321 | $ 718 | $ 652 |
| Acquired in-place lease value [Member] | |||
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Amortization recorded as amortization expense | 22,104 | 24,174 | 13,170 |
| Above market ground lease [Member] | |||
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Amortization recorded as a reduction to property operating expense | 94 | 94 | 24 |
| Acquired above market lease value [Member] | |||
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Amortization recorded as a (reduction) increase to rental income | (4,379) | (4,341) | (2,334) |
| Acquired below market lease value [Member] | |||
| Acquired Finite Lived Intangible Assets [Line Items] | |||
| Amortization recorded as a (reduction) increase to rental income | $ 5,700 | $ 5,059 | $ 2,986 |
Schedule of Estimated Amortization of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Future amortization for acquired in-place and above market lease assets: | ||
| Acquired lease intangibles, net | $ 138,658 | $ 150,108 |
| Future amortization for below market lease liabilities: | ||
| 2018 (remainder of year) | (4,470) | |
| 2019 | (4,325) | |
| 2020 | (4,104) | |
| 2021 | (3,917) | |
| 2022 | (3,657) | |
| Thereafter | (36,838) | |
| Total | (57,311) | |
| Future amortization for above market ground lease liabilities: | ||
| 2018 (remainder of year) | (94) | |
| 2019 | (94) | |
| 2020 | (94) | |
| 2021 | (94) | |
| 2022 | (94) | |
| Thereafter | (4,489) | |
| Total | (4,959) | |
| Acquired in-place lease value [Member] | ||
| Future amortization for acquired in-place and above market lease assets: | ||
| 2018 (remainder of year) | 18,995 | |
| 2019 | 17,031 | |
| 2020 | 14,012 | |
| 2021 | 11,475 | |
| 2022 | 8,830 | |
| Thereafter | 33,955 | |
| Acquired lease intangibles, net | 104,298 | |
| Acquired above market lease value [Member] | ||
| Future amortization for acquired in-place and above market lease assets: | ||
| 2018 (remainder of year) | 3,794 | |
| 2019 | 3,430 | |
| 2020 | 3,091 | |
| 2021 | 3,021 | |
| 2022 | 2,715 | |
| Thereafter | 18,309 | |
| Acquired lease intangibles, net | $ 34,360 |
Debt and Derivative Instruments (Schedule of Mortgages and Credit Facility Payable) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Mortgage Loans On Real Estate [Line Items] | ||
| Mortgages payable | $ 609,521 | $ 576,836 |
| Credit facility payable | 83,800 | 31,000 |
| Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps | 693,321 | 607,836 |
| Add: Unamortized mortgage premiums | 2,316 | 3,080 |
| Less: Unamortized debt issuance costs | (4,172) | (4,891) |
| Total debt | $ 691,465 | $ 606,025 |
| Mortgages Payable, Weighted Average Interest Rate | 3.69% | 3.62% |
| Credit Facilities Payable, Weighted Average Interest Rate | 3.21% | 2.26% |
| Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps, Weighted Average Interest Rate | 3.63% | 3.55% |
| Fixed rate mortgages payable [Member] | ||
| Mortgage Loans On Real Estate [Line Items] | ||
| Mortgages payable | $ 171,851 | $ 178,345 |
| Mortgages Payable, Weighted Average Interest Rate | 4.25% | 4.31% |
| Variable rate mortgages payable with swap agreements [Member] | ||
| Mortgage Loans On Real Estate [Line Items] | ||
| Mortgages payable | $ 383,517 | $ 354,488 |
| Mortgages Payable, Weighted Average Interest Rate | 3.49% | 3.42% |
| Variable rate mortgages payable [Member] | ||
| Mortgage Loans On Real Estate [Line Items] | ||
| Mortgages payable | $ 54,153 | $ 44,003 |
| Mortgages Payable, Weighted Average Interest Rate | 3.26% | 2.50% |
Debt and Derivative Instruments (Narrative) (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Debt Instrument [Line Items] | ||
| Indebtedness includes effects of interest rate swap, weighted average interest rate | 3.63% | |
| Carrying value of debt | $ 693,321,000 | $ 607,836,000 |
| Estimated fair value of debt | 684,621,000 | $ 595,404,000 |
| Amount expected to be reclassified from accumulated other comprehensive income into income in the next twelve months | $ (124,000) | |
| Mortgages Payable [Member] | ||
| Debt Instrument [Line Items] | ||
| Weighted Average Years to Maturity | 4 years 2 months 12 days | |
| Mortgages payable, covenant compliance | the Company was current on all of the payments and in compliance with all financial covenants. | |
| Revolving Credit Facility [Member] | ||
| Debt Instrument [Line Items] | ||
| Carrying value of debt | $ 83,800,000 | |
| Credit facility, maximum borrowing capacity | 110,000,000 | |
| Line of credit accordion feature to increase available borrowings | $ 400,000,000 | |
| Credit facility, maturity date | Sep. 30, 2019 | |
| Credit facility, interest rate | 3.21% | |
| Credit facility available for borrowing | $ 26,200,000 |
Debt and Derivative Instruments (Schedule of Principal Payments and Maturities of Company's Debt) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| 2018 | $ 15,481 | |
| 2019 | 236,465 | |
| 2020 | 897 | |
| 2021 | 84,271 | |
| 2022 | 126,632 | |
| Thereafter | 229,575 | |
| Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps | 693,321 | $ 607,836 |
| Revolving Credit Facility [Member] | ||
| Debt Instrument [Line Items] | ||
| 2019 | 83,800 | |
| Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps | 83,800 | |
| Scheduled Principal Payments [Member] | ||
| Debt Instrument [Line Items] | ||
| 2018 | 221 | |
| 2019 | 215 | |
| 2020 | 897 | |
| 2021 | 1,531 | |
| 2022 | 615 | |
| Thereafter | 962 | |
| Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps | 4,441 | |
| Maturities of Mortgage Loans [Member] | ||
| Debt Instrument [Line Items] | ||
| 2018 | 15,260 | |
| 2019 | 152,450 | |
| 2021 | 82,740 | |
| 2022 | 126,017 | |
| Thereafter | 228,613 | |
| Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps | $ 605,080 |
Debt and Derivative Instruments (Summary of Interest Rate Swap Contracts Outstanding) (Details) $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
|
Dec. 31, 2017
USD ($)
| ||||
| Derivative [Line Items] | ||||
| Derivative instrument, notional amount | $ 287,338 | |||
| Fair value of derivative assets measured on recurring basis | 6,136 | |||
| Derivative instrument, notional amount | 96,179 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (340) | |||
| Interest Rate Swap One [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jun. 27, 2014 | |||
| Derivative instrument, effective date | Jul. 01, 2014 | |||
| Derivative instrument, maturity date | Jul. 01, 2019 | |||
| Derivative instrument, pay fixed interest rate | 1.85% | [1] | ||
| Derivative instrument, notional amount | $ 24,352 | |||
| Fair value of derivative assets measured on recurring basis | $ 9 | |||
| Interest Rate Swap Two [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Feb. 11, 2015 | |||
| Derivative instrument, effective date | Mar. 02, 2015 | |||
| Derivative instrument, maturity date | Mar. 01, 2022 | |||
| Derivative instrument, pay fixed interest rate | 2.02% | [1] | ||
| Derivative instrument, notional amount | $ 6,114 | |||
| Fair value of derivative assets measured on recurring basis | $ 19 | |||
| Interest Rate Swap Three [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Apr. 07, 2015 | |||
| Derivative instrument, effective date | Apr. 07, 2015 | |||
| Derivative instrument, maturity date | Apr. 07, 2022 | |||
| Derivative instrument, pay fixed interest rate | 1.74% | [1] | ||
| Derivative instrument, notional amount | $ 49,400 | |||
| Fair value of derivative assets measured on recurring basis | $ 723 | |||
| Interest Rate Swap Four [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jul. 08, 2015 | |||
| Derivative instrument, effective date | Aug. 01, 2015 | |||
| Derivative instrument, maturity date | May 22, 2019 | |||
| Derivative instrument, pay fixed interest rate | 1.43% | [1] | ||
| Derivative instrument, notional amount | $ 1,426 | |||
| Fair value of derivative assets measured on recurring basis | $ 8 | |||
| Interest Rate Swap Five [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Sep. 17, 2015 | |||
| Derivative instrument, effective date | Sep. 17, 2015 | |||
| Derivative instrument, maturity date | Sep. 17, 2022 | |||
| Derivative instrument, pay fixed interest rate | 1.90% | [1] | ||
| Derivative instrument, notional amount | $ 13,700 | |||
| Fair value of derivative assets measured on recurring basis | $ 137 | |||
| Interest Rate Swap Six [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Oct. 02, 2015 | |||
| Derivative instrument, effective date | Nov. 01, 2015 | |||
| Derivative instrument, maturity date | Nov. 01, 2022 | |||
| Derivative instrument, pay fixed interest rate | 1.79% | [1] | ||
| Derivative instrument, notional amount | $ 13,100 | |||
| Fair value of derivative assets measured on recurring basis | $ 201 | |||
| Interest Rate Swap Seven [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jan. 25, 2016 | |||
| Derivative instrument, effective date | Feb. 01, 2016 | |||
| Derivative instrument, maturity date | Feb. 01, 2021 | |||
| Derivative instrument, pay fixed interest rate | 1.40% | [1] | ||
| Derivative instrument, notional amount | $ 38,000 | |||
| Fair value of derivative assets measured on recurring basis | $ 733 | |||
| Interest Rate Swap Eight [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jun. 07, 2016 | |||
| Derivative instrument, effective date | Jul. 01, 2016 | |||
| Derivative instrument, maturity date | Jul. 01, 2023 | |||
| Derivative instrument, pay fixed interest rate | 1.42% | [1] | ||
| Derivative instrument, notional amount | $ 43,680 | |||
| Fair value of derivative assets measured on recurring basis | $ 1,648 | |||
| Interest Rate Swap Nine [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jul. 21, 2016 | |||
| Derivative instrument, effective date | Aug. 01, 2016 | |||
| Derivative instrument, maturity date | Aug. 01, 2023 | |||
| Derivative instrument, pay fixed interest rate | 1.30% | [1] | ||
| Derivative instrument, notional amount | $ 47,550 | |||
| Fair value of derivative assets measured on recurring basis | $ 2,147 | |||
| Interest Rate Swap Ten [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Aug. 29, 2016 | |||
| Derivative instrument, effective date | Oct. 21, 2016 | |||
| Derivative instrument, maturity date | Dec. 15, 2019 | |||
| Derivative instrument, pay fixed interest rate | 1.07% | [1] | ||
| Derivative instrument, notional amount | $ 10,836 | |||
| Fair value of derivative assets measured on recurring basis | $ 184 | |||
| Interest Rate Swap Eleven [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Apr. 27, 2017 | |||
| Derivative instrument, effective date | Apr. 26, 2017 | |||
| Derivative instrument, maturity date | Apr. 26, 2022 | |||
| Derivative instrument, pay fixed interest rate | 1.91% | [1] | ||
| Derivative instrument, notional amount | $ 24,480 | |||
| Fair value of derivative assets measured on recurring basis | $ 202 | |||
| Interest Rate Swap Twelve [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jun. 05, 2017 | |||
| Derivative instrument, effective date | May 31, 2017 | |||
| Derivative instrument, maturity date | May 15, 2022 | |||
| Derivative instrument, pay fixed interest rate | 1.90% | [1] | ||
| Derivative instrument, notional amount | $ 14,700 | |||
| Fair value of derivative assets measured on recurring basis | $ 125 | |||
| Interest Rate Swap Thirteen [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Mar. 28, 2014 | |||
| Derivative instrument, effective date | Mar. 01, 2015 | |||
| Derivative instrument, maturity date | Mar. 28, 2019 | |||
| Derivative instrument, pay fixed interest rate | 2.22% | [1] | ||
| Derivative instrument, notional amount | $ 5,525 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (27) | |||
| Interest Rate Swap Fourteen [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | May 08, 2014 | |||
| Derivative instrument, effective date | May 05, 2015 | |||
| Derivative instrument, maturity date | May 07, 2019 | |||
| Derivative instrument, pay fixed interest rate | 2.10% | [1] | ||
| Derivative instrument, notional amount | $ 14,200 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (49) | |||
| Interest Rate Swap Fifteen [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | May 23, 2014 | |||
| Derivative instrument, effective date | May 01, 2015 | |||
| Derivative instrument, maturity date | May 22, 2019 | |||
| Derivative instrument, pay fixed interest rate | 2.00% | [1] | ||
| Derivative instrument, notional amount | $ 8,484 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (17) | |||
| Interest Rate Swap Sixteen [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jun. 06, 2014 | |||
| Derivative instrument, effective date | Jun. 01, 2015 | |||
| Derivative instrument, maturity date | May 08, 2019 | |||
| Derivative instrument, pay fixed interest rate | 2.15% | [1] | ||
| Derivative instrument, notional amount | $ 11,684 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (48) | |||
| Interest Rate Swap Seventeen [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jun. 26, 2014 | |||
| Derivative instrument, effective date | Jul. 05, 2015 | |||
| Derivative instrument, maturity date | Jul. 05, 2019 | |||
| Derivative instrument, pay fixed interest rate | 2.11% | [1] | ||
| Derivative instrument, notional amount | $ 20,725 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (74) | |||
| Interest Rate Swap Eighteen [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Jul. 31, 2014 | |||
| Derivative instrument, effective date | Jul. 31, 2014 | |||
| Derivative instrument, maturity date | Jul. 31, 2019 | |||
| Derivative instrument, pay fixed interest rate | 1.94% | [1] | ||
| Derivative instrument, notional amount | $ 9,561 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (8) | |||
| Interest Rate Swap Nineteen [Member] | ||||
| Derivative [Line Items] | ||||
| Derivative instrument, date entered | Dec. 23, 2015 | |||
| Derivative instrument, effective date | Dec. 23, 2015 | |||
| Derivative instrument, maturity date | Jan. 02, 2026 | |||
| Derivative instrument, pay fixed interest rate | 2.30% | [1] | ||
| Derivative instrument, notional amount | $ 26,000 | |||
| Fair value of derivative liabilities measured on recurring basis | $ (117) | |||
| ||||
Debt and Derivative Instruments (Summary of Interest Rate Swap Contracts Outstanding) (Parenthetical) (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| Derivative [Line Items] | |
| Derivative instrument, receive floating rate index | one month LIBOR |
| LIBOR [Member] | |
| Derivative [Line Items] | |
| One month floating rate | 1.56% |
Debt and Derivative Instruments (Derivatives on Consolidated Statements of Operations and Other Comprehensive Loss) (Details) - Designated as Hedging Instrument [Member] - Cash Flow Hedging [Member] - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Derivative Instruments, Gain (Loss) [Line Items] | |||
| Effective portion of derivatives | $ 1,043 | $ 1,861 | $ (4,612) |
| Reclassification adjustment for amounts included in net gain or loss (effective portion) | 2,405 | 4,038 | 2,546 |
| Ineffective portion of derivatives | $ 7 | $ 233 | $ 365 |
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Oct. 02, 2017 |
Jun. 13, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation vesting percentage | 33.33% | 33.33% | ||
| Restricted Stock [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation shares issued | 331 | 1,326 | ||
| Unrecognized compensation expense of unvested share-based awards | $ 44 | $ 26 | ||
| Weighted average remaining period unrecognized compensation expense related to non-vested | 1 year 6 months | |||
| Common stock shares issued upon vesting | 1 | |||
| Restricted Stock [Member] | Minimum [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation vesting period | 1 year | |||
| Restricted Stock [Member] | Maximum [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation vesting period | 3 years | |||
| Restricted Stock Units (RSUs) [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation shares issued | 110 | 442 | ||
| Unrecognized compensation expense of unvested share-based awards | $ 44 | 26 | ||
| Weighted average remaining period unrecognized compensation expense related to non-vested | 1 year 6 months | |||
| Common stock shares issued upon vesting | 1 | |||
| Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation vesting period | 1 year | |||
| Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation vesting period | 3 years | |||
| Non-Employee Directors [Member] | Restricted Stock [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation expense | $ 33 | 14 | ||
| Non-Employee Directors [Member] | Restricted Stock Units (RSUs) [Member] | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Share-based compensation expense | $ 33 | $ 14 | ||
Equity-Based Compensation (Summary of the Restricted Shares and Restricted Share Units) (Details) - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Outstanding, Weighted Average Grant Date Fair Value | $ 40 | |
| Granted, Weighted Average Grant Date Fair Value | 51 | $ 40 |
| Vested, Weighted Average Grant Date Fair Value | (13) | |
| Outstanding, Weighted Average Grant Date Fair Value | 78 | 40 |
| Outstanding, Aggregate Intrinsic Value | 40 | |
| Granted, Aggregate Intrinsic Value | 51 | 40 |
| Vested, Aggregate Intrinsic Value | (13) | |
| Outstanding, Aggregate Intrinsic Value | $ 78 | $ 40 |
| Restricted Stock [Member] | ||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Outstanding, Shares | 1,330 | |
| Granted, Shares | 1,657 | 1,330 |
| Vested, Shares | (444) | |
| Outstanding, Shares | 2,543 | 1,330 |
| Restricted Stock Units (RSUs) [Member] | ||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Outstanding, Shares | 460 | |
| Granted, Shares | 600 | 460 |
| Vested, Shares | (156) | |
| Outstanding, Shares | 904 | 460 |
Income Tax and Distributions (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Income Tax And Distributions [Line Items] | |||
| Daily amount per share of distributions | $ 0.00410959 | $ 0.00409836 | $ 0.00410959 |
| Taxable income (loss) | $ 10,045 | $ 9,890 | $ 13,123 |
| Minimum [Member] | |||
| Income Tax And Distributions [Line Items] | |||
| Percentage of adjusted REIT taxable income require to distribute among shareholders | 90.00% | ||
Income Tax and Distributions (Schedule of Distributions Paid and Declared) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Income Tax And Distributions [Abstract] | |||
| Distributions paid | $ 53,315 | $ 52,358 | $ 42,537 |
| Distributions declared | $ 53,364 | $ 52,449 | $ 44,908 |
Income Tax and Distributions - (Schedule of Taxability of Distributions on Common Shares) (Details) - $ / shares |
12 Months Ended | |||||
|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
[1] | |||
| Income Tax And Distributions [Abstract] | ||||||
| Ordinary income | $ 0.29 | $ 0.29 | $ 0.50 | |||
| Nontaxable return of capital | $ 1.21 | $ 1.21 | $ 1.18 | |||
| ||||||
Income Tax and Distributions - (Schedule of Taxability of Distributions on Common Shares) (Parenthetical) (Details) $ in Thousands |
Feb. 19, 2015
USD ($)
|
|---|---|
| Income Tax And Distributions [Abstract] | |
| Special distribution | $ 3,283 |
Earnings (Loss) per Share (Details) - shares |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Earnings Per Share [Abstract] | |||
| Additional shares excluded from the computation of diluted earnings per share | 1,507 | 1,214 | |
| Dilutive common share equivalents outstanding | 0 | ||
Commitments and Contingencies (Narrative) (Details) |
12 Months Ended |
|---|---|
|
Dec. 31, 2017
USD ($)
| |
| Other Commitments [Line Items] | |
| The maximum potential earnout payment for acquisitions made during period | $ 2,040,000 |
| Mezzanine Loans [Member] | Mainstreet JV [Member] | |
| Other Commitments [Line Items] | |
| Aggregate amount committed to provide in joint venture loan agreement | $ 5,400,000 |
| Term of joint venture loan agreement | 48 months |
| Interest rate on joint venture loan amount | 14.50% |
| Periodic interest receivable, pay rate | 10.00% |
| Frequency of periodic payments of interest on joint venture loan | monthly |
| Amount loaned under joint venture agreement | $ 0 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Commitments And Contingencies Disclosure [Abstract] | ||
| Earnout liability-beginning of period | $ 6,856 | $ 18,871 |
| Increases: | ||
| Amortization expense | 35 | 531 |
| Decreases: | ||
| Earnout payments | (6,415) | (9,067) |
| Other: | ||
| Adjustments to acquisition related costs | 574 | (3,479) |
| Earnout liability – end of period | $ 1,050 | $ 6,856 |
Segment Reporting (Details) - Segment |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Segment Reporting [Abstract] | |||
| Number of reportable segments | 1 | 1 | 1 |
Transactions with Related Parties (Narrative) (Details) - USD ($) |
12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||||
| Related Party Transaction [Line Items] | ||||||||
| Return of original capital investment | $ 100,000 | |||||||
| Earnings from limited partnership investments | 21,000 | |||||||
| Return of original capital investment income (loss) | 21,000 | $ 252,000 | $ (118,000) | |||||
| Liability for additional proportional costs associated with termination of partnership | $ 0 | |||||||
| Number of common stock shares owned in related party | 1,000 | 1,000 | 1,000 | |||||
| Value of common stock shares owned in related party | $ 1,000 | $ 1,000 | $ 1,000 | |||||
| Price per share of common stock sold to related parties during period | $ 22.50 | |||||||
| Common stock shares sold to related party during period | 11,252 | |||||||
| Asset acquisition fee to contract purchase price, percentage | 1.50% | |||||||
| Acquisition related costs | $ 754,000 | (1,556,000) | $ 13,903,000 | |||||
| Total acquisition fees waived by business manager during period | $ 0 | 0 | 2,510,000 | |||||
| Selling commissions per price of each share sold, percentage | 7.00% | |||||||
| Marketing contribution to gross offering proceeds, percentage | 3.00% | |||||||
| Annual business management fee to its average invested assets, percentage | 0.65% | |||||||
| Quarterly payable business management fee to its average invested assets, percentage | 0.1625% | |||||||
| Maximum [Member] | ||||||||
| Related Party Transaction [Line Items] | ||||||||
| Out-of-pocket itemized and detailed expenses reimbursed, percentage | 0.50% | |||||||
| Costs and other expenses reimbursed to Sponsor, percentage | 1.50% | |||||||
| Acquisition Related Costs and Fee [Member] | ||||||||
| Related Party Transaction [Line Items] | ||||||||
| Total acquisition cost | [1] | $ 1,540,000 | 1,736,000 | 10,968,000 | ||||
| Acquisition costs capitalized | 1,260,000 | 74,000 | ||||||
| Acquisition costs capitalized as investment in unconsolidated entities | 134,000 | |||||||
| Acquisition related costs | $ 146,000 | $ 1,662,000 | ||||||
| Monthly Real Estate Management Fee Of Single Tenant Property [Member] | Maximum [Member] | ||||||||
| Related Party Transaction [Line Items] | ||||||||
| Property management fee, percentage | 1.90% | |||||||
| Monthly Real Estate Management Fee Of Any Other Property [Member] | Maximum [Member] | ||||||||
| Related Party Transaction [Line Items] | ||||||||
| Property management fee, percentage | 3.90% | |||||||
| Sponsor Contribution [Member] | ||||||||
| Related Party Transaction [Line Items] | ||||||||
| Total acquisition cost | [2] | $ 3,283,000 | ||||||
| ||||||||
Transactions with Related Parties (Schedule of Related Party Transactions) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Real estate management related costs with related party | [1] | $ 5,127 | $ 4,762 | $ 2,937 | ||||||||||||||
| Due to related parties | 2,665 | 2,663 | ||||||||||||||||
| General and Administrative Reimbursements [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| General and administrative expenses incurred with related party | [2] | 1,608 | 1,975 | 1,367 | ||||||||||||||
| Due to related parties | [2] | 203 | 274 | |||||||||||||||
| Affiliate Share Purchase Discounts [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| General and administrative expenses incurred with related party | [3] | 28 | ||||||||||||||||
| Total General and Administrative Expenses [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| General and administrative expenses incurred with related party | 1,608 | 1,975 | 1,395 | |||||||||||||||
| Due to related parties | 203 | 274 | ||||||||||||||||
| Acquisition Related Costs [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Expenses incurred with related party | [4] | 274 | 409 | 1,388 | ||||||||||||||
| Acquisition related costs | 88 | |||||||||||||||||
| Acquisition Fees [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Expenses incurred with related party | [4] | 1,266 | 1,327 | 9,580 | ||||||||||||||
| Acquisition related costs | 51 | |||||||||||||||||
| Acquisition Related Costs and Fee [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Expenses incurred with related party | [4] | 1,540 | 1,736 | 10,968 | ||||||||||||||
| Acquisition related costs | [4] | 51 | 88 | |||||||||||||||
| Real Estate Management Fees [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Real estate management related costs with related party | 4,800 | 4,473 | 2,762 | |||||||||||||||
| Construction Management Fees [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Real estate management related costs with related party | 113 | 121 | 135 | |||||||||||||||
| Due to related parties | 35 | 53 | ||||||||||||||||
| Leasing fees [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Real estate management related costs with related party | 214 | 168 | 40 | |||||||||||||||
| Due to related parties | 51 | 89 | ||||||||||||||||
| Offering Costs [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Expenses incurred with related party | [5] | 41,180 | ||||||||||||||||
| Business Management Fee [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Expenses incurred with related party | [6] | 9,196 | 8,580 | 5,501 | ||||||||||||||
| Due to related parties | [6] | 2,325 | 2,159 | |||||||||||||||
| Sponsor Contribution [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Expenses incurred with related party | [7] | $ 3,283 | ||||||||||||||||
| Real Estate Management Costs [Member] | ||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||
| Due to related parties | [1] | $ 86 | $ 142 | |||||||||||||||
| ||||||||||||||||||
Operating Leases (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
|---|---|
| Leases [Abstract] | |
| 2018 | $ 92,365 |
| 2019 | 85,756 |
| 2020 | 79,083 |
| 2021 | 73,330 |
| 2022 | 63,477 |
| Thereafter | 236,458 |
| Total | $ 630,469 |
Operating Leases (Narrative) (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| Leases [Abstract] | |
| Remaining lease terms range description | from less than one year to 19 years. |
Fair Value Measurements (Schedule of Cash Flow Hedges and Classification on Consolidated Balance Sheets) (Details) - Recurring [Member] - Interest Rate Swap Agreements [Member] - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Other Assets [Member] | ||
| Derivatives Fair Value [Line Items] | ||
| Interest rate swap agreements - Other assets | $ 6,136 | $ 4,250 |
| Other Liabilities [Member] | ||
| Derivatives Fair Value [Line Items] | ||
| Interest rate swap agreements - Other liabilities | 340 | 1,909 |
| Level 2 [Member] | Other Assets [Member] | ||
| Derivatives Fair Value [Line Items] | ||
| Interest rate swap agreements - Other assets | 6,136 | 4,250 |
| Level 2 [Member] | Other Liabilities [Member] | ||
| Derivatives Fair Value [Line Items] | ||
| Interest rate swap agreements - Other liabilities | $ 340 | $ 1,909 |
Fair Value Measurements (Narrative) (Details) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Fair Value Disclosures [Abstract] | |||
| Impairment charges | $ 8,530,000 | $ 0 | $ 0 |
| Capitalization rate | 7.50% | ||
| Discount rate | 8.50% | ||
| Fair value of investment property based on discounted cash flow model term | 10 years | ||
Fair Value Measurements (Schedule of Assets Measured at Fair Value on a Non-Recurring Basis) (Details) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
| Total Impairment Loss | $ 8,530,000 | $ 0 | $ 0 |
| Non-recurring [Member] | |||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
| Investment property | 5,557,000 | ||
| Total Impairment Loss | 8,530,000 | ||
| Non-recurring [Member] | Investment Property [Member] | |||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
| Investment property | 5,557,000 | ||
| Total Impairment Loss | 8,530,000 | ||
| Non-recurring [Member] | Level 3 [Member] | |||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
| Investment property | 5,557,000 | ||
| Non-recurring [Member] | Level 3 [Member] | Investment Property [Member] | |||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
| Investment property | $ 5,557,000 | ||
Quarterly Supplemental Financial Information - Schedule of Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|||||||||||
| Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||
| Total income | $ 32,529 | $ 32,110 | $ 32,911 | $ 31,607 | $ 30,921 | $ 30,903 | $ 30,295 | $ 29,379 | $ 129,157 | $ 121,498 | $ 76,542 | ||||||||||
| Net loss | $ (10,811) | $ (2,856) | $ (3,631) | $ (1,804) | $ (459) | $ (961) | $ (2,300) | $ (4,241) | $ (19,102) | $ (7,961) | $ (13,436) | ||||||||||
| Net loss per common share, basic and diluted | $ (0.30) | [1] | $ (0.08) | [1] | $ (0.10) | [1] | $ (0.05) | [1] | $ (0.01) | [1] | $ (0.03) | [1] | $ (0.07) | [1] | $ (0.12) | [1] | $ (0.54) | $ (0.23) | $ (0.48) | ||
| Weighted average number of common shares outstanding, basic and diluted | 35,615,539 | [1] | 35,657,535 | [1] | 35,580,556 | [1] | 35,428,360 | [1] | 35,255,079 | [1] | 35,074,161 | [1] | 34,867,650 | [1] | 34,654,004 | [1] | 35,571,249 | 34,963,827 | 27,737,301 | ||
| |||||||||||||||||||||
Schedule III Real Estate and Accumulated Depreciation (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 609,521 | |||||||||||||||
| Initial cost, Land | [1] | 277,229 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 1,003,804 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 7,884 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 277,229 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 1,011,688 | ||||||||||||||
| Gross amount carried at end of period, Total | 1,288,917 | [2],[3] | $ 1,233,231 | $ 1,161,437 | $ 414,463 | |||||||||||
| Accumulated Depreciation | (101,094) | [4] | $ (62,631) | $ (27,545) | $ (6,236) | |||||||||||
| 2727 Iowa Street [Member] | Lawrence, KS [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | 2,154 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 16,079 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | 49 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 2,154 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 16,128 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 18,282 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (1,520) | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| 2727 Iowa Street [Member] | Lawrence, KS [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2014 | ||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| 2727 Iowa Street [Member] | Lawrence, KS [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2015 | ||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Blossom Valley Plaza [Member] | Turlock, CA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 9,515 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 11,142 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | 437 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 9,515 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 11,579 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 21,094 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (966) | ||||||||||||||
| Date Constructed | [5] | 1988 | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Blossom Valley Plaza [Member] | Turlock, CA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Blossom Valley Plaza [Member] | Turlock, CA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Branson Hills Plaza [Member] | Branson, MO [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1] | $ 3,787 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 6,039 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 3,787 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 6,039 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 9,826 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (694) | ||||||||||||||
| Date Constructed | 2005 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Branson Hills Plaza [Member] | Branson, MO [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Branson Hills Plaza [Member] | Branson, MO [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Coastal North Town Center [Member] | Myrtle Beach, SC [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 43,680 | |||||||||||||||
| Initial cost, Land | [1] | 13,725 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 49,673 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | (744) | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 13,725 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 48,929 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 62,654 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,982) | ||||||||||||||
| Date Constructed | 2014 | |||||||||||||||
| Date Acquired | 2016 | |||||||||||||||
| Coastal North Town Center [Member] | Myrtle Beach, SC [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Coastal North Town Center [Member] | Myrtle Beach, SC [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Coastal North Town Center Phase II [Member] | Myrtle Beach, SC [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1] | $ 365 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 3,034 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 365 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 3,034 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 3,399 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (54) | ||||||||||||||
| Date Constructed | 2016 | |||||||||||||||
| Date Acquired | 2017 | |||||||||||||||
| Coastal North Town Center Phase II [Member] | Myrtle Beach, SC [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Coastal North Town Center Phase II [Member] | Myrtle Beach, SC [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dixie Valley [Member] | Louisville, KY [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 6,798 | |||||||||||||||
| Initial cost, Land | [1] | 2,807 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 9,053 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 949 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 2,807 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 10,002 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 12,809 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,181) | ||||||||||||||
| Date Constructed | 1988 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Dixie Valley [Member] | Louisville, KY [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dixie Valley [Member] | Louisville, KY [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dogwood Festival [Member] | Flowood, MO [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 24,352 | |||||||||||||||
| Initial cost, Land | [1] | 4,500 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 41,865 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 1,472 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 4,500 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 43,337 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 47,837 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (5,654) | ||||||||||||||
| Date Constructed | 2002 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Dogwood Festival [Member] | Flowood, MO [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 5 years | |||||||||||||||
| Dogwood Festival [Member] | Flowood, MO [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Brooks, GA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 558 | |||||||||||||||
| Initial cost, Land | [1] | 159 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 857 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 159 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 857 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,016 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (160) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Brooks, GA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Brooks, GA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Daleville, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 481 | |||||||||||||||
| Initial cost, Land | [1] | 69 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 761 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 69 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 761 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 830 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (142) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Daleville, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Daleville, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | East Brewton, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 520 | |||||||||||||||
| Initial cost, Land | [1] | 148 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 780 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 148 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 780 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 928 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (150) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | East Brewton, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | East Brewton, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Madisonville, TN [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 695 | |||||||||||||||
| Initial cost, Land | [1] | 273 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 939 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 273 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 939 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,212 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (181) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Madisonville, TN [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Madisonville, TN [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Maryville, TN [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 631 | |||||||||||||||
| Initial cost, Land | [1] | 249 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 841 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 249 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 841 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,090 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (157) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Maryville, TN [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Maryville, TN [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Mobile, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 601 | |||||||||||||||
| Initial cost, Land | [1] | 208 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 836 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 208 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 836 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,044 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (156) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Mobile, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Mobile, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Newport, TN [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 586 | |||||||||||||||
| Initial cost, Land | [1] | 200 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 818 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 200 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 818 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,018 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (149) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Newport, TN [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Newport, TN [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Robertsdale, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 847 | |||||||||||||||
| Initial cost, Land | [1] | 324 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 1,178 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 324 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 1,178 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,502 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (226) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Robertsdale, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Robertsdale, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Valley, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 531 | |||||||||||||||
| Initial cost, Land | [1] | 119 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 805 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 119 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 805 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 924 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (150) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Valley, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Valley, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General [Member] | Wetumpka, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 692 | |||||||||||||||
| Initial cost, Land | [1] | 272 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 939 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 272 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 939 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,211 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (181) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General [Member] | Wetumpka, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General [Member] | Wetumpka, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General (Hamilton) [Member] | LaGrange, GA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 621 | |||||||||||||||
| Initial cost, Land | [1] | 100 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 986 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 100 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 986 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,086 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (183) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General (Hamilton) [Member] | LaGrange, GA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General (Hamilton) [Member] | LaGrange, GA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Dollar General (Wares Cross) [Member] | LaGrange, GA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 681 | |||||||||||||||
| Initial cost, Land | [1] | 248 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 943 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 248 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 943 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 1,191 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (176) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2012 | |||||||||||||||
| Dollar General (Wares Cross) [Member] | LaGrange, GA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Dollar General (Wares Cross) [Member] | LaGrange, GA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Eastside Junction [Member] | Athens, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 6,223 | |||||||||||||||
| Initial cost, Land | [1] | 2,411 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 8,393 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 2,411 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 8,393 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 10,804 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (895) | ||||||||||||||
| Date Constructed | 2008 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Eastside Junction [Member] | Athens, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Eastside Junction [Member] | Athens, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Fairgrounds Crossing [Member] | Hot Springs, AR [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 13,453 | |||||||||||||||
| Initial cost, Land | [1] | 6,069 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 22,637 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 6,069 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 22,637 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 28,706 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,257) | ||||||||||||||
| Date Constructed | 2008 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Fairgrounds Crossing [Member] | Hot Springs, AR [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Fairgrounds Crossing [Member] | Hot Springs, AR [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Fox Point Plaza [Member] | Neenah, WI [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 10,837 | |||||||||||||||
| Initial cost, Land | [1] | 3,518 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 12,681 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 717 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 3,518 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 13,398 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 16,916 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,599) | ||||||||||||||
| Date Constructed | 2008 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Fox Point Plaza [Member] | Neenah, WI [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Fox Point Plaza [Member] | Neenah, WI [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Frisco Marketplace [Member] | Frisco, TX [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 6,618 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 3,315 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 6,618 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 3,315 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 9,933 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (419) | ||||||||||||||
| Date Constructed | [5] | 2002 | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Frisco Marketplace [Member] | Frisco, TX [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Frisco Marketplace [Member] | Frisco, TX [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Green Tree Shopping Center [Member] | Katy, TX [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 13,100 | |||||||||||||||
| Initial cost, Land | [1] | 7,218 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 17,846 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | (102) | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 7,218 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 17,744 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 24,962 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,771) | ||||||||||||||
| Date Constructed | 1997 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Green Tree Shopping Center [Member] | Katy, TX [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 5 years | |||||||||||||||
| Green Tree Shopping Center [Member] | Katy, TX [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Harris Plaza [Member] | Layton, UT [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 6,500 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 19,403 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | 1,324 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 6,500 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 20,727 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 27,227 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (3,223) | ||||||||||||||
| Date Acquired | [5] | 2014 | ||||||||||||||
| Harris Plaza [Member] | Layton, UT [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2001 | ||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Harris Plaza [Member] | Layton, UT [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2008 | ||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Harvest Square [Member] | Harvest, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 6,707 | |||||||||||||||
| Initial cost, Land | [1] | 2,186 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 9,330 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 136 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 2,186 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 9,466 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 11,652 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,105) | ||||||||||||||
| Date Constructed | 2008 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Harvest Square [Member] | Harvest, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Harvest Square [Member] | Harvest, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Heritage Square [Member] | Conyers, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 4,460 | |||||||||||||||
| Initial cost, Land | [1] | 2,028 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 5,538 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 260 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 2,028 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 5,798 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 7,826 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (651) | ||||||||||||||
| Date Constructed | 2010 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Heritage Square [Member] | Conyers, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Heritage Square [Member] | Conyers, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Kroger - Copps Grocery Store [Member] | Stevens Point, WI [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 1,440 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 11,799 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 1,440 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 11,799 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 13,239 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (1,304) | ||||||||||||||
| Date Constructed | [5] | 2012 | ||||||||||||||
| Date Acquired | [5] | 2014 | ||||||||||||||
| Kroger - Copps Grocery Store [Member] | Stevens Point, WI [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Kroger - Copps Grocery Store [Member] | Stevens Point, WI [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Kroger - Pick n Save Center [Member] | West Bend, WI [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 9,561 | |||||||||||||||
| Initial cost, Land | [1] | 3,150 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 14,283 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 375 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 3,150 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 14,658 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 17,808 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,756) | ||||||||||||||
| Date Constructed | 2011 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Kroger - Pick n Save Center [Member] | West Bend, WI [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Kroger - Pick n Save Center [Member] | West Bend, WI [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Lakeside Crossing [Member] | Lynchburg, VA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 9,910 | |||||||||||||||
| Initial cost, Land | [1] | 1,460 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 16,999 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 271 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 1,460 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 17,270 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 18,730 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,233) | ||||||||||||||
| Date Constructed | 2013 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Lakeside Crossing [Member] | Lynchburg, VA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Lakeside Crossing [Member] | Lynchburg, VA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Landing at Ocean Isle Beach [Member] | Ocean Isle, NC [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 3,053 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 7,081 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | 69 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 3,053 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 7,150 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 10,203 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (907) | ||||||||||||||
| Date Constructed | [5] | 2009 | ||||||||||||||
| Date Acquired | [5] | 2014 | ||||||||||||||
| Landing at Ocean Isle Beach [Member] | Ocean Isle, NC [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Landing at Ocean Isle Beach [Member] | Ocean Isle, NC [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Mansfield Pointe [Member] | Mansfield, TX [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 14,200 | |||||||||||||||
| Initial cost, Land | [1] | 5,350 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 20,002 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 2 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 5,350 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 20,004 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 25,354 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,787) | ||||||||||||||
| Date Constructed | 2008 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Mansfield Pointe [Member] | Mansfield, TX [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Mansfield Pointe [Member] | Mansfield, TX [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Marketplace at El Paseo [Member] | Fresno, CA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 38,000 | |||||||||||||||
| Initial cost, Land | [1] | 16,390 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 46,971 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | (517) | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 16,390 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 46,454 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 62,844 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (3,654) | ||||||||||||||
| Date Constructed | 2014 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Marketplace at El Paseo [Member] | Fresno, CA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Marketplace at El Paseo [Member] | Fresno, CA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Marketplace at Tech Center [Member] | Newport News, VA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 47,550 | |||||||||||||||
| Initial cost, Land | [1] | 10,684 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 68,580 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | (208) | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 10,684 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 68,372 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 79,056 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (4,844) | ||||||||||||||
| Date Constructed | 2015 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Marketplace at Tech Center [Member] | Newport News, VA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Marketplace at Tech Center [Member] | Newport News, VA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| MidTowne Shopping Center [Member] | Little Rock, AR [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 20,725 | |||||||||||||||
| Initial cost, Land | [1] | 8,810 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 29,699 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 456 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 8,810 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 30,155 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 38,965 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (4,116) | ||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| MidTowne Shopping Center [Member] | Little Rock, AR [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2005 | |||||||||||||||
| Depreciable Lives | 5 years | |||||||||||||||
| MidTowne Shopping Center [Member] | Little Rock, AR [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2008 | |||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Milford Marketplace [Member] | Milford, CT [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 18,727 | |||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 35,867 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 40 | |||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 35,907 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 35,907 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,885) | ||||||||||||||
| Date Constructed | 2007 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Milford Marketplace [Member] | Milford, CT [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Milford Marketplace [Member] | Milford, CT [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Newington Fair [Member] | Newington, CT [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 7,833 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 8,329 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | 331 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 7,833 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 8,660 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 16,493 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (1,968) | ||||||||||||||
| Date Acquired | [5] | 2012 | ||||||||||||||
| Newington Fair [Member] | Newington, CT [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 1994 | ||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Newington Fair [Member] | Newington, CT [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2009 | ||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| North Hills Square [Member] | Coral Springs, FL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 5,525 | |||||||||||||||
| Initial cost, Land | [1] | 4,800 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 5,493 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 183 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 4,800 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 5,676 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 10,476 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (786) | ||||||||||||||
| Date Constructed | 1997 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| North Hills Square [Member] | Coral Springs, FL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| North Hills Square [Member] | Coral Springs, FL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Oquirrh Mountain Marketplace [Member] | Jordan, UT [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 4,254 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 14,467 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | (156) | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 4,254 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 14,311 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 18,565 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (1,085) | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Oquirrh Mountain Marketplace [Member] | Jordan, UT [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2014 | ||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Oquirrh Mountain Marketplace [Member] | Jordan, UT [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2015 | ||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Oquirrh Mountain Marketplace Phase II [Member] | Jordan, UT [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 1,403 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 3,727 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | (54) | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 1,403 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 3,673 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 5,076 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (217) | ||||||||||||||
| Date Acquired | [5] | 2016 | ||||||||||||||
| Oquirrh Mountain Marketplace Phase II [Member] | Jordan, UT [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2014 | ||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Oquirrh Mountain Marketplace Phase II [Member] | Jordan, UT [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2015 | ||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Park Avenue Shopping Center [Member] | Little Rock, AR [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 14,062 | |||||||||||||||
| Initial cost, Land | [1] | 5,500 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 16,365 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 2,932 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 5,500 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 19,297 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 24,797 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,551) | ||||||||||||||
| Date Constructed | 2012 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Park Avenue Shopping Center [Member] | Little Rock, AR [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Park Avenue Shopping Center [Member] | Little Rock, AR [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Pentucket Shopping Center [Member] | Plaistow, NH [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 14,700 | |||||||||||||||
| Initial cost, Land | [1] | 5,993 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 11,251 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 29 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 5,993 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 11,280 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 17,273 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (327) | ||||||||||||||
| Date Constructed | 1986 | |||||||||||||||
| Date Acquired | 2017 | |||||||||||||||
| Pentucket Shopping Center [Member] | Plaistow, NH [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Pentucket Shopping Center [Member] | Plaistow, NH [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Plaza at Prairie Ridge [Member] | Pleasant Prairie, WI [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 618 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 2,305 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 618 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 2,305 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 2,923 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (234) | ||||||||||||||
| Date Constructed | [5] | 2008 | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Plaza at Prairie Ridge [Member] | Pleasant Prairie, WI [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Plaza at Prairie Ridge [Member] | Pleasant Prairie, WI [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Prattville Town Center [Member] | Prattville, AL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 15,930 | |||||||||||||||
| Initial cost, Land | [1] | 5,336 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 27,672 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 90 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 5,336 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 27,762 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 33,098 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,817) | ||||||||||||||
| Date Constructed | 2007 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Prattville Town Center [Member] | Prattville, AL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Prattville Town Center [Member] | Prattville, AL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Regal Court [Member] | Shreveport, LA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 26,000 | |||||||||||||||
| Initial cost, Land | [1] | 5,873 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 41,181 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 1,151 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 5,873 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 42,332 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 48,205 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (4,211) | ||||||||||||||
| Date Constructed | 2008 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Regal Court [Member] | Shreveport, LA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 5 years | |||||||||||||||
| Regal Court [Member] | Shreveport, LA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Settlers Ridge [Member] | Pittsburgh, PA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 76,533 | |||||||||||||||
| Initial cost, Land | [1] | 25,961 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 98,157 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 186 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 25,961 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 98,343 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 124,304 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (8,317) | ||||||||||||||
| Date Constructed | 2011 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Settlers Ridge [Member] | Pittsburgh, PA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Settlers Ridge [Member] | Pittsburgh, PA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Shoppes at Lake Park [Member] | West Valley City. UT [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 2,285 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 8,527 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 2,285 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 8,527 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 10,812 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (904) | ||||||||||||||
| Date Constructed | [5] | 2008 | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Shoppes at Lake Park [Member] | West Valley City. UT [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Shoppes at Lake Park [Member] | West Valley City. UT [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Shoppes at Market Pointe [Member] | Papillion, NE [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 13,700 | |||||||||||||||
| Initial cost, Land | [1] | 12,499 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 8,388 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 590 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 12,499 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 8,978 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 21,477 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,247) | ||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Shoppes at Market Pointe [Member] | Papillion, NE [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2006 | |||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Shoppes at Market Pointe [Member] | Papillion, NE [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2007 | |||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Shoppes at Prairie Ridge [Member] | Pleasant Prairie, WI [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 15,591 | |||||||||||||||
| Initial cost, Land | [1] | 7,521 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 22,468 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 279 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 7,521 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 22,747 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 30,268 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (2,454) | ||||||||||||||
| Date Constructed | 2009 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| Shoppes at Prairie Ridge [Member] | Pleasant Prairie, WI [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Shoppes at Prairie Ridge [Member] | Pleasant Prairie, WI [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| The Shoppes at Branson Hills [Member] | Branson, MO [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 20,240 | |||||||||||||||
| Initial cost, Land | [1] | 4,418 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 37,229 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 920 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 4,418 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 38,149 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 42,567 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (4,078) | ||||||||||||||
| Date Constructed | 2005 | |||||||||||||||
| Date Acquired | 2014 | |||||||||||||||
| The Shoppes at Branson Hills [Member] | Branson, MO [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| The Shoppes at Branson Hills [Member] | Branson, MO [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Shops at Hawk Ridge [Member] | St. Louis, MO [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 1,329 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 10,341 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | 240 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 1,329 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 10,581 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 11,910 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (1,096) | ||||||||||||||
| Date Constructed | [5] | 2009 | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Shops at Hawk Ridge [Member] | St. Louis, MO [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 5 years | ||||||||||||||
| Shops at Hawk Ridge [Member] | St. Louis, MO [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Treasure Valley [Member] | Nampa, ID [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 3,133 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 12,000 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 3,133 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 12,000 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 15,133 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (1,177) | ||||||||||||||
| Date Constructed | [5] | 2014 | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Treasure Valley [Member] | Nampa, ID [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Treasure Valley [Member] | Nampa, ID [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| Village at Burlington Creek [Member] | Kansas City, MO [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 17,723 | |||||||||||||||
| Initial cost, Land | [1] | 10,789 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 19,385 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 342 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 10,789 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 19,727 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 30,516 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,807) | ||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Village at Burlington Creek [Member] | Kansas City, MO [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2007 | |||||||||||||||
| Depreciable Lives | 5 years | |||||||||||||||
| Village at Burlington Creek [Member] | Kansas City, MO [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2015 | |||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Walgreens Plaza [Member] | Jacksonville, NC [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 4,650 | |||||||||||||||
| Initial cost, Land | [1] | 2,624 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 9,683 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 199 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 2,624 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 9,882 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 12,506 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (1,010) | ||||||||||||||
| Date Constructed | 2011 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| Walgreens Plaza [Member] | Jacksonville, NC [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Walgreens Plaza [Member] | Jacksonville, NC [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Wedgewood Commons [Member] | Olive Branch, MS [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 15,260 | |||||||||||||||
| Initial cost, Land | [1] | 2,220 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 26,577 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 129 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 2,220 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 26,706 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 28,926 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (3,745) | ||||||||||||||
| Date Acquired | 2013 | |||||||||||||||
| Wedgewood Commons [Member] | Olive Branch, MS [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2009 | |||||||||||||||
| Depreciable Lives | 5 years | |||||||||||||||
| Wedgewood Commons [Member] | Olive Branch, MS [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | 2013 | |||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Whispering Ridge [Member] | Omaha, NE [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 1,627 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 10,418 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | (6,670) | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 1,627 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 3,748 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | $ 5,375 | ||||||||||||||
| Date Constructed | [5] | 2007 | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Whispering Ridge [Member] | Omaha, NE [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 5 years | ||||||||||||||
| Whispering Ridge [Member] | Omaha, NE [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| White City [Member] | Shrewsbury, MA [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 49,400 | |||||||||||||||
| Initial cost, Land | [1] | 18,961 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 70,423 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | 1,679 | |||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 18,961 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 72,102 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 91,063 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (6,990) | ||||||||||||||
| Date Constructed | 2013 | |||||||||||||||
| Date Acquired | 2015 | |||||||||||||||
| White City [Member] | Shrewsbury, MA [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| White City [Member] | Shrewsbury, MA [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Wilson Marketplace [Member] | Wilson, NC [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Encumbrance | $ 24,480 | |||||||||||||||
| Initial cost, Land | [1] | 11,155 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1] | 27,498 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3] | 11,155 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3] | 27,498 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3] | 38,653 | ||||||||||||||
| Accumulated Depreciation | [4] | $ (926) | ||||||||||||||
| Date Constructed | 2007 | |||||||||||||||
| Date Acquired | 2017 | |||||||||||||||
| Wilson Marketplace [Member] | Wilson, NC [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 15 years | |||||||||||||||
| Wilson Marketplace [Member] | Wilson, NC [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Depreciable Lives | 30 years | |||||||||||||||
| Yorkville Marketplace [Member] | Yorkville, IL [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Initial cost, Land | [1],[5] | $ 4,990 | ||||||||||||||
| Initial cost, Buildings and Improvements | [1],[5] | 13,928 | ||||||||||||||
| Cost Capitalized Subsequent to Acquisitions | [5] | 498 | ||||||||||||||
| Gross amount carried at end of period, Land | [2],[3],[5] | 4,990 | ||||||||||||||
| Gross amount carried at end of period, Building and Improvements | [2],[3],[5] | 14,426 | ||||||||||||||
| Gross amount carried at end of period, Total | [2],[3],[5] | 19,416 | ||||||||||||||
| Accumulated Depreciation | [4],[5] | $ (1,679) | ||||||||||||||
| Date Acquired | [5] | 2015 | ||||||||||||||
| Yorkville Marketplace [Member] | Yorkville, IL [Member] | Minimum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2002 | ||||||||||||||
| Depreciable Lives | [5] | 15 years | ||||||||||||||
| Yorkville Marketplace [Member] | Yorkville, IL [Member] | Maximum [Member] | ||||||||||||||||
| Real Estate And Accumulated Depreciation [Line Items] | ||||||||||||||||
| Date Constructed | [5] | 2007 | ||||||||||||||
| Depreciable Lives | [5] | 30 years | ||||||||||||||
| ||||||||||||||||
Schedule III Real Estate and Accumulated Depreciation (Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Real Estate And Accumulated Depreciation Disclosure [Abstract] | ||
| Aggregate cost of real estate owned for federal income tax purpose | $ 1,440,279 | $ 1,364,864 |
Schedule III Real Estate and Accumulated Depreciation - Reconciliation of Real Estate Owned (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||||
| Real Estate And Accumulated Depreciation Disclosure [Abstract] | ||||||||
| Balance at January 1, | $ 1,233,231 | $ 1,161,437 | $ 414,463 | |||||
| Acquisitions | 59,306 | 68,977 | 743,893 | |||||
| Improvements, net of master lease | 5,594 | 2,817 | 3,081 | |||||
| Impairment of investment property | (9,214) | |||||||
| Balance at December 31, | $ 1,288,917 | [1],[2] | $ 1,233,231 | $ 1,161,437 | ||||
| ||||||||
Schedule III Real Estate and Accumulated Depreciation - Reconciliation of Accumulated Depreciation (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||
|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
||||
| Real Estate And Accumulated Depreciation Disclosure [Abstract] | ||||||
| Balance at January 1, | $ 62,631 | $ 27,545 | $ 6,236 | |||
| Depreciation expense | 39,497 | 35,086 | 21,309 | |||
| Impairment of investment property | (1,034) | |||||
| Balance at December 31, | $ 101,094 | [1] | $ 62,631 | $ 27,545 | ||
| ||||||
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