REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

12 Months Ended

Dec. 31, 2016

Real Estate [Abstract]

REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

5. REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

The following tables present additional detail related to our real estate portfolio ($ in thousands):

	December 31, 2016			December 31, 2015
Land	$	143,286		$	138,128
Building	646,372			640,206
In-place leases and other intangibles	154,687			139,501
Less: Accumulated depreciation and amortization	(122,007		)	(83,056		)
Real estate and related lease intangibles, net	$	822,338		$	834,779
Below market lease intangibles, net (other liabilities)	$	(16,506	)	$	(17,021	)

The following table presents depreciation and amortization expense on real estate recorded by the Company ($ in thousands):

	Year Ended December 31,
	2016		2015		2014
Depreciation expense (1)	$	26,031	$	23,922	$	18,034
Amortization expense	13,302		15,031		10,238
Total real estate depreciation and amortization expense	$	39,333	$	38,953	$	28,272

(1) Depreciation expense on the combined consolidated statements of income also includes $0.1 million, $0.1 million and $0.2 million of depreciation on corporate fixed assets for the years ended December 31, 2016, 2015 and 2014, respectively.

The Company’s intangible assets are comprised of in-place leases, favorable leases compared to market leases and other intangibles. At December 31, 2016, gross intangible assets totaled $154.7 million with total accumulated amortization of $48.1 million, resulting in net intangible assets of $106.6 million, including $7.0 million of unamortized favorable lease intangibles which are included in real estate and related lease intangibles, net on the combined consolidated balance sheets. At December 31, 2015, gross intangible assets totaled $139.5 million with total accumulated amortization of $32.7 million, resulting in net intangible assets of $106.8 million, including $6.5 million of unamortized favorable lease intangibles which are included in real estate and related lease intangibles, net on the combined consolidated balance sheets. For the years ended December 31, 2016, 2015 and 2014, the Company recorded a net reduction in operating lease income of $1.3 million, $1.4 million and $1.3 million, respectively, for amortization of above market lease intangibles acquired. For the years ended December 31, 2016, 2015 and 2014, the Company recorded a net increase in operating lease income of $1.4 million, $1.8 million and $0.9 million, respectively, for amortization of below market lease intangibles acquired.

The following table presents expected amortization expense during the next five years and thereafter related to the acquired in-place lease intangibles for property owned as of December 31, 2016 ($ in thousands):

Period Ending December 31,	Amount
2017	$	10,307
2018	8,219
2019	8,175
2020	8,175
2021	8,101
Thereafter	63,578
Total	$	106,555

There were $0.7 million and $5.0 million of unbilled rent receivables included in other assets on the combined consolidated balance sheets as of December 31, 2016 and 2015, respectively.

There was unencumbered real estate of $70.3 million and $47.8 million as of December 31, 2016 and 2015, respectively.

The following is a schedule of non-cancellable, contractual, future minimum rent under leases (excluding property operating expenses paid directly by tenant under net leases or rent escalations under other leases from tenants) at December 31, 2016 ($ in thousands):

Period Ending December 31,	Amount
2017	$	73,960
2018	68,757
2019	63,666
2020	61,789
2021	56,929
Thereafter	500,481
Total	$	825,582

Acquisitions

During the year ended December 31, 2016, the Company acquired the following properties ($ in thousands):

Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)
April 2016	Land	St. Paul, MN	$	200	100.0%
April 2016	Net Lease	Dimmitt, TX	1,319		100.0%
April 2016	Net Lease	Philo, IL	1,156		100.0%
April 2016	Net Lease	St. Charles, MN	1,198		100.0%
May 2016	Net Lease	San Antonio, TX	1,096		100.0%
May 2016	Net Lease	Borger, TX	978		100.0%
June 2016	Net Lease	Champaign, IL	1,324		100.0%
June 2016	Net Lease	Decatur-Sunnyside, IL	1,181		100.0%
June 2016	Net Lease	Flora Vista, NM	1,305		100.0%
June 2016	Net Lease	Mountain Grove, MO	1,279		100.0%
June 2016	Net Lease	Rantoul, IL	1,204		100.0%
June 2016	Net Lease	Decatur-Pershing, IL	1,365		100.0%
June 2016	Net Lease	Cape Girardeau, MO	1,281		100.0%
June 2016	Net Lease	Linn, MO	1,122		100.0%
July 2016	Net Lease	Union, MO	1,227		100.0%
July 2016	Net Lease	Pawnee, IL	1,201		100.0%
July 2016	Net Lease	Lamar, MO	1,176		100.0%
August 2016	Other	Ewing, NJ	30,640		100.0%
October 2016	Other	Peoria, IL	2,760		100.0%
October 2016	Net Lease	Dryden Township, MI	1,190		100.0%
November 2016	Net Lease	Fayetteville, NC	6,971		100.0%
November 2016	Net Lease	Springfield, IL	1,322		100.0%
Total			$	62,495

(1) Properties were consolidated as of acquisition date.

On October 1, 2016, the Company early adopted Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”). As a result of this adoption, acquisitions of real estate do not meet the revised definition of a business and are treated as asset acquisitions rather than business combinations. The measurement of assets and liabilities acquired will no longer be recorded at fair value and the Company will now allocate purchase consideration based on relative fair values. Real estate acquisition costs are no longer expensed as incurred and will now be capitalized as a component of the cost of the assets acquired.

The purchase prices were allocated to the net assets acquired, which also include asset acquisitions occurring on or after October 1, 2016, during the year ended December 31, 2016, as follows ($ in thousands):

	Purchase Price Allocation
Land	$	9,242
Building	39,609
Intangibles	15,854
Below Market Lease Intangibles	(2,210		)
Total purchase price	$	62,495

The weighted average amortization period for intangible assets acquired during the year ended December 31, 2016 was 19.5 years.

During the year ended December 31, 2015, the Company acquired the following properties ($ in thousands):

Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)
January 2015	Net Lease	Jacksonville, NC	$	7,877	100.0%
January 2015	Net Lease	Iberia, MO	1,328		100.0%
January 2015	Net Lease	Isle, MN	1,078		100.0%
January 2015	Net Lease	Pine Island, MN	1,142		100.0%
January 2015	Net Lease	Kings Mountain, NC	21,241		100.0%
February 2015	Net Lease	Village of Menomonee Falls, WI	17,050		100.0%
February 2015	Net Lease	Rockland, MA	7,316		100.0%
February 2015	Net Lease	Crawfordsville, IA	6,000		100.0%
February 2015	Net Lease	Boardman Township, OH	5,400		100.0%
March 2015	Net Lease	Hilliard, OH	6,384		100.0%
March 2015	Net Lease	Weathersfield Township, OH	5,200		100.0%
March 2015	Net Lease	Rotterdam, NY	12,000		100.0%
March 2015	Net Lease	Wheaton, MO	970		100.0%
March 2015	Net Lease	Paynesville, MN	1,254		100.0%
March 2015	Net Lease	Loveland, CO	5,600		100.0%
March 2015	Net Lease	Battle Lake, MN	1,098		100.0%
March 2015	Net Lease	Yorktown, TX	1,207		100.0%
March 2015	Net Lease	St. Francis, MN	1,117		100.0%
May 2015	Net Lease	Red Oak, IA	1,185		100.0%
May 2015	Net Lease	Zapata, TX	1,150		100.0%
June 2015	Net Lease	Aurora, MN	952		100.0%
June 2015	Net Lease	Canyon Lake, TX	1,377		100.0%
June 2015	Net Lease	Wheeler, TX	1,075		100.0%
June 2015	Other	Grand Rapids, MI	9,300		97.0%
June 2015	Other	Grand Rapids, MI	6,300		97.0%
June 2015	Net Lease	Bridgeport, IL	1,186		100.0%
June 2015	Net Lease	Peoria, IL	1,226		100.0%
June 2015	Net Lease	Pleasanton, TX	1,316		100.0%
June 2015	Other	Wayne, NJ	9,700		100.0%
June 2015	Net Lease	Warren, MN	1,055		100.0%

Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)
June 2015	Net Lease	Tremont, IL	1,150		100.0%
August 2015	Net Lease	Ponce, Puerto Rico	8,900		100.0%
August 2015	Net Lease	Effingham County, IL	1,195		100.0%
August 2015	Net Lease	Lebanon, MI	1,200		100.0%
August 2015	Net Lease	Minot, ND	6,644		100.0%
August 2015	Net Lease	Floresville, TX	1,251		100.0%
August 2015	Net Lease	Kerrville, TX	1,174		97.0%
September 2015	Net Lease	De Soto, IL	1,066		97.0%
September 2015	Net Lease	Biscoe, NC	1,216		100.0%
September 2015	Net Lease	Moultrie, GA	1,305		100.0%
September 2015	Net Lease	Rose Hill, NC	1,420		100.0%
September 2015	Net Lease	Rockingham, NC	1,158		100.0%
October 2015	Net Lease	Wilmington, IL	1,309		100.0%
October 2015	Net Lease	Danville, IL	1,074		100.0%
October 2015	Net Lease	Bloomington, IL	1,193		100.0%
October 2015	Net Lease	Lincoln County , MO	1,072		100.0%
October 2015	Net Lease	Montrose, MN	1,167		100.0%
October 2015	Net Lease	Jenks, OK	12,160		100.0%
October 2015	Net Lease	Grove, OK	5,030		100.0%
October 2015	Net Lease	Farmington, IL	1,303		100.0%
October 2015	Net Lease	Bixby, OK	10,978		100.0%
October 2015	Net Lease	Rice, MN	1,200		100.0%
November 2015	Net Lease	Gordonville, MO	1,125		100.0%
December 2015	Net Lease	Malone, NY	1,466		100.0%
December 2015	Net Lease	Mercedes, TX	1,204		100.0%
December 2015	Net Lease	Albion, PA	1,525		100.0%
December 2015	Net Lease	Radford, VA	1,564		100.0%
December 2015	Net Lease	Rural Retreat, VA	1,399		100.0%
December 2015	Net Lease	Mount Vernon, AL	1,224		100.0%
Total purchases of real estate			$	212,756
October 2015	Other	Carmel, NY	6,700		100.0%
Total real estate acquired via foreclosure			$	6,700
Total real estate acquisitions			$	219,456

(1) Properties were consolidated as of acquisition date.

The purchase prices were allocated to the net assets acquired during the year ended December 31, 2015, as follows ($ in thousands):

	Purchase Price Allocation
Land	$	32,260
Building	166,556
Intangibles	32,084
Below Market Lease Intangibles	(11,444		)
Total purchase price	$	219,456

The weighted average amortization period for intangible assets acquired during the year ended December 31, 2015 was 22.6 years.

During the year ended December 31, 2015, the Company acquired, via foreclosure, title to one commercial retail operating property, which had a total fair value of $6.7 million and previously served as collateral for mortgage loan receivables held for investment. The acquisition was accounted for at fair value on the date of foreclosure. This loan was not originated by the Company. Instead, it was credit impaired at the time of acquisition, which was reflected in Ladder’s purchase price. A gain of $0.8 million on disposition of loan, representing the difference between the fair value of the property and the $5.9 million carrying value of the loan on the date of foreclosure, is included in fee and other income in the Company’s combined consolidated statement of income for the year ended December 31, 2015.

During the year ended December 31, 2014, the Company acquired the following properties ($ in thousands):

Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)
August 2014	Net Lease	O'Fallon, IL	$	8,000	100.0%
August 2014	Net Lease	El Centro, CA	4,277		100.0%
August 2014	Other	Richmond, VA	19,850		77.5%
August 2014	Net Lease	Conyers, GA	32,530		100.0%
September 2014	Other	St. Paul, MN	62,340		97.0%
October 2014	Net Lease	Bennett, CO	3,522		100.0%
October 2014	Net Lease	Memphis, TN	5,310		100.0%
November 2014	Net Lease	Ankemy, IA	16,510		100.0%
November 2014	Net Lease	Springfield, MO	11,675		100.0%
November 2014	Net Lease	Sheldon, IA	4,300		100.0%
November 2014	Net Lease	Cedar Rapids, IA	11,000		100.0%
November 2014	Net Lease	Fairfield, IA	10,695		100.0%
November 2014	Net Lease	Muscatine, IA	7,150		100.0%
November 2014	Net Lease	Owatonna, MN	9,970		100.0%
November 2014	Net Lease	Bellport, NY	18,100		100.0%
November 2014	Net Lease	Woodland Park, CO	3,969		100.0%
November 2014	Net Lease	Evansville, IN	9,000		100.0%
December 2014	Net Lease	Plattsmouth, NE	7,979		100.0%
December 2014	Net Lease	Worthington, MN	8,320		100.0%
Total			$	254,497

(1) Properties were consolidated as of acquisition date.

The purchase prices were allocated to the net assets acquired during the year ended December 31, 2014, as follows ($ in thousands):

	Purchase Price Allocation
Land	$	41,908
Building	168,714
Intangibles	48,819
Below Market Lease Intangibles	(4,944		)
Total purchase price	$	254,497

The weighted average amortization period for intangible assets acquired during the year ended December 31, 2014 was 17.1 years.

Sales

The Company sold the following properties during the year ended December 31, 2016 ($ in thousands):

Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining
Mar 2016	Net Lease	Rockland, MA	7,922		7,210		712		1	—	—
Sep 2016	Net Lease	Crawfordsville, IN	6,192		5,726		466		1	—	—
Various	Condominium	Las Vegas, NV	34,049		18,907		15,142		—	73	59
Various	Condominium	Miami, FL	18,307		13,991		4,316		—	65	88
Totals			$	66,470	$	45,834	$	20,636

The Company sold the following properties during the year ended December 31, 2015 ($ in thousands):

Sales Date	Type	Primary Location(s)	Net Sales Proceeds			Net Book Value		Realized Gain/(Loss)			Properties	Units Sold	Units Remaining
May 2015	Net Lease	Plattsmouth, NE	$	8,440		$	7,983	$	457		1	—	—
May 2015	Net Lease	Worthington, MN	8,793			8,321		472			1	—	—
May 2015	Net Lease	Loveland, CO	6,249			5,600		649			1	—	—
Sep 2015	Net Lease	Village of Menomonee Falls, WI	17,856		(1)	16,827		1,029		(2)	1	—	—
Nov 2015	Other	Minneapolis, MN	62,093		(3)	49,022		13,071		(4)	1	—	—
Various	Condominium	Las Vegas, NV	38,779			22,310		16,469			—	88	132
Various	Condominium	Miami, FL	29,924			22,942		6,982			—	99	153
Totals			$	172,134		$	133,005	$	39,129	(5)

(1) Includes $11.3 million of mortgage debt assumed by the buyer, which is included in non-cash transactions on the Company’s combined consolidated statement of cash flows.

(2) Excludes $0.3 million of gain on mortgage debt assumed by the buyer, which is included in realized gain on sale of real estate, net on the Company’s combined consolidated statement of cash flows.

(3) Includes $39.8 million of mortgage debt assumed by the buyer, which is included in non-cash transactions on the Company’s combined consolidated statement of cash flows.

(4) Excludes $1.1 million of gain on mortgage debt assumed by the buyer, which is included in realized gain on sale of real estate, net on the Company’s combined consolidated statement of cash flows.

(5) Includes $0.2 million loss on sales of fixed assets, which is included in realized gain on sale of real estate, net on the Company’s combined consolidated statements of income.

The Company sold the following properties during the year ended December 31, 2014 ($ in thousands):

Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining
May 2014	Net Lease	Tilton, NH	$	8,432	$	6,743	$	1,689	1	—	—
Jun 2014	Other	Richmond, VA	16,754		15,643		1,111		1	—	—
Sep 2014	Net Lease	Yulee, FL	1,436		1,246		190		1	—	—
Sep 2014	Net Lease	Middleburg, FL	1,262		1,077		185		1	—	—
Sep 2014	Net Lease	Jonesboro, AR	9,413		8,016		1,397		1	—	—
Sep 2014	Net Lease	Mt. Juliet, TN	10,168		8,724		1,444		1	—	—
Various	Condominium	Las Vegas, NV	52,976		33,925		19,051		—	113	220
Various	Condominium	Miami, FL	23,003		18,310		4,693		—	72	252
Totals			$	123,444	$	93,684	$	29,760

Real Estate Sold or Classified as Held for Sale

On January 1, 2014, the Company early adopted ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, and as the properties sold or classified as real estate held for sale in the years ended December 31, 2016, 2015 and 2014 did not represent a strategic shift (as the Company is not entirely exiting markets or property types), they have not been reflected as part of discontinued operations.

Unaudited Pro Forma Information

The following unaudited pro forma information has been prepared based upon our historical combined consolidated financial statements and certain historical financial information of the acquired properties, which are accounted for as business combinations, and should be read in conjunction with the combined consolidated financial statements and notes thereto. The unaudited pro forma combined consolidated financial information reflects the 2016 acquisition adjustments made to present financial results as though the acquisition of such properties occurred on January 1, 2015, through the date of acquisition, the 2015 acquisition adjustments made to present financial results as though the acquisition of the properties occurred on January 1, 2014, through the date of acquisition and the 2014 acquisition adjustments made to present financial results as though the acquisition of the properties occurred on January 1, 2013, through the date of acquisition. This unaudited pro forma information may not be indicative of the results that actually would have occurred if these transactions had been in effect on the dates indicated, nor do they purport to represent our future results of operations ($ in thousands):

	Year Ended December 31, 2016
	Company Historical			Acquisitions			Consolidated Pro Forma
Operating lease income	$	77,277		$	2,473		$	79,750
Net income (loss)	113,720			2,080			115,800
Net (income) loss attributable to noncontrolling interest in consolidated joint ventures	138			—			138
Net (income) loss attributable to noncontrolling interest in operating partnership	(47,131		)	(865		)	(47,996		)
Net income attributable to Class A common shareholders	66,727			1,215			67,942

The Company recorded $2.8 million in revenues and $(0.3) million in earnings (losses) from its 2016 acquisitions for the year ended December 31, 2016, which are included in our combined consolidated statements of income.

	Year Ended December 31, 2015
	Company Historical			Acquisitions			Consolidated Pro Forma
Operating lease income	$	80,465		$	10,966		$	91,431
Net income	146,134			7,363			153,497
Net (income) loss attributable to noncontrolling interest in consolidated joint ventures	(1,568		)	—			(1,568		)
Net (income) loss attributable to noncontrolling interest in operating partnership	(70,745		)	(3,334		)	(74,079		)
Net income attributable to Class A common shareholders	73,821			4,029			77,850

The Company recorded $14.0 million in revenues and $3.2 million in earnings from its 2015 acquisitions for the year ended December 31, 2015, which are included in our combined consolidated statements of income.

	Year Ended December 31, 2014
	Company Historical			Acquisitions			Consolidated Pro Forma
Operating lease income	$	56,649		$	34,446		$	91,095
Net income	97,626			10,518			108,144
Net (income) loss attributable to noncontrolling interest in consolidated joint ventures	370			257			627
Net (income) loss attributable to predecessor unitholders	12,628			—			12,628
Net (income) loss attributable to noncontrolling interest in operating partnership	(66,437		)	(4,922		)	(71,359		)
Net income attributable to Class A common shareholders	44,187			5,852			50,039

The Company recorded $7.3 million in revenues and $(1.6) million in earnings (losses) from its 2014 acquisitions for the year ended December 31, 2014, which are included in our combined consolidated statements of income.

The most significant adjustments made in preparing the unaudited pro forma information were to: (i) include the incremental operating lease income, (ii) include the incremental depreciation, and (iii) adjust for transaction costs associated with the properties acquired in 2016 as if they were incurred on January 1, 2015, the properties acquired in 2015 as if they were incurred on January 1, 2014 and the properties acquired in 2014 as if they were incurred on

January 1, 2013.