QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction |
(I.R.S. Employer | |
of incorporation or organization) |
Identification No.) |
Title of Each Class |
Trading Symbol(s) |
Name of each Exchange on Which Registered | ||
“ “ |
| Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
| Emerging growth company | ||||||
| 3 | ||||
| 3 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 8 | ||||
| 9 | ||||
| 19 | ||||
| 31 | ||||
| 31 | ||||
| 32 | ||||
| 32 | ||||
| 32 | ||||
| 33 | ||||
| 34 | ||||
| 34 | ||||
| 34 | ||||
| 35 | ||||
| 36 | ||||
September 30, 2020 |
December 31, 2019 |
|||||||
| Assets |
||||||||
| Real estate properties |
||||||||
| Land |
$ | $ | ||||||
| Building and improvement |
||||||||
| Tenant improvement |
||||||||
| Furniture, fixtures and equipment |
||||||||
| |
|
|
|
|||||
| Accumulated depreciation |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| |
|
|
|
|||||
| Cash and cash equivalents |
||||||||
| Restricted cash |
||||||||
| Rents receivable, net |
||||||||
| Deferred leasing costs, net |
||||||||
| Acquired lease intangible assets, net |
||||||||
| Other assets |
||||||||
| Assets held for sale |
— | |||||||
| |
|
|
|
|||||
| Total Assets |
$ | $ | ||||||
| |
|
|
|
|||||
| Liabilities and Equity |
||||||||
| Liabilities: |
||||||||
| Debt |
$ | $ | ||||||
| Accounts payable and accrued liabilities |
||||||||
| Deferred rent |
||||||||
| Tenant rent deposits |
||||||||
| Acquired lease intangible liabilities, net |
||||||||
| Other liabilities |
||||||||
| Liabilities related to assets held for sale |
— | |||||||
| |
|
|
|
|||||
| Total Liabilities |
||||||||
| |
|
|
|
|||||
| Commitments and Contingencies (Note 9) |
||||||||
| Equity: |
||||||||
| |
||||||||
| Common stock, $ |
||||||||
| Additional paid-in capital |
||||||||
| Accumulated deficit |
( |
) | ( |
) | ||||
| Accumulated other comprehensive (loss)/income |
( |
) | ||||||
| |
|
|
|
|||||
| Total Stockholders’ Equity |
||||||||
| Non-controlling interests in properties |
||||||||
| |
|
|
|
|||||
| Total Equity |
||||||||
| |
|
|
|
|||||
| Total Liabilities and Equity |
$ | $ | ||||||
| |
|
|
|
|||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
| Rental and other revenues |
$ | $ | $ | $ | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Property operating expenses |
||||||||||||||||
| General and administrative |
||||||||||||||||
| Depreciation and amortization |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total operating expenses |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Operating income |
||||||||||||||||
| Interest expense: |
||||||||||||||||
| Contractual interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Amortization of deferred financing costs and debt fair value |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| ( |
) | ( |
) | ( |
) | ( |
) | |||||||||
| Net gain on sale of real estate property |
— | |||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net income/(loss) |
( |
) | ( |
) | ||||||||||||
| Less: |
||||||||||||||||
| Net income attributable to non-controlling interests in properties |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net income/(loss) attributable to the Company |
( |
) | ( |
) | ||||||||||||
| Preferred stock distributions |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net income/(loss) attributable to common stockholders |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net income/(loss) per common share: |
||||||||||||||||
| Basic |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| |
|
|
|
|
|
|
|
|||||||||
| Diluted |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| |
|
|
|
|
|
|
|
|||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Diluted |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Dividend distributions declared per common share |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
| Net income/(loss) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Other comprehensive income/(loss): |
||||||||||||||||
| Unrealized cash flow hedge (loss)/gain |
( |
) | ( |
) | ||||||||||||
| Amounts reclassified to interest expense |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Other comprehensive income/(loss) |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Comprehensive income/(loss) |
( |
) | ( |
) | ||||||||||||
| Less: |
||||||||||||||||
| Comprehensive income attributable to non-controlling interests in properties |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Comprehensive income/(loss) attributable to the Company |
( |
) | ( |
) | ||||||||||||
| Preferred stock distributions |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Comprehensive income/(loss) attributable to common stockholders |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||
| |
|
|
|
|
|
|
|
|||||||||
Number of shares of preferred stock |
Preferred stock |
Number of shares of common stock |
Common stock |
Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive (loss)/income |
Total stockholders’ equity |
Non- controlling interests in properties |
Total equity |
|||||||||||||||||||||||||||||||
| Balance—December 31, 2019 |
$ | $ | |
$ | $ | ( |
$ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Restricted stock award grants and vesting |
— | — | — | ( |
— | — | ||||||||||||||||||||||||||||||||||
| Common stock repurchased |
— | — | ( |
) | ( |
) | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
| Common stock dividend distribution declared |
— | — | — | — | — | ( |
— | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||
| Preferred stock dividend distribution declared |
— | — | — | — | — | ( |
— | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||
| Contributions |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Distributions |
— | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss |
— | — | — | — | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Balance—March 31, 2020 |
$ | $ | $ | $ | ( |
$ | ( |
) | $ | $ | $ | |
||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Restricted stock award grants and vesting |
— | — | ( |
) | — | — | ||||||||||||||||||||||||||||||||||
| Common stock repurchased |
— | — | ( |
) | ( |
) | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
| Common stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Preferred stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Distributions |
— | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss |
— | — | — | — | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Balance—June 30, 2020 |
$ | $ | $ | $ | ( |
$ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Restricted stock award grants and vesting |
— | — | — | ( |
) | — | — | |||||||||||||||||||||||||||||||||
| Common stock repurchased |
— | — | ( |
) | ( |
) | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
| Common stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Preferred stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Distributions |
— | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Balance—September 30, 2020 |
$ | $ | $ | $ | ( |
$ | ( |
$ | $ | $ | ||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Number of shares of preferred stock |
Preferred stock |
Number of shares of common stock |
Common stock |
Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive (loss)/income |
Total stockholders’ equity |
Non- controlling interests in properties |
Total equity |
|||||||||||||||||||||||||||||||
| Balance—December 31, 2018 |
$ | $ | |
$ | $ | ( |
$ | — | $ | $ | $ | |||||||||||||||||||||||||||||
| Restricted stock award grants and vesting |
— | — | ( |
— | — | |||||||||||||||||||||||||||||||||||
| Common stock dividend distribution declared |
— | — | — | — | — | ( |
— | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||
| Preferred stock dividend distribution declared |
— | — | — | — | — | ( |
— | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||
| Contributions |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Distributions |
— | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | ( |
) | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Balance—March 31, 2019 |
$ | $ | $ | $ | ( |
$ | — | $ | $ | $ | ||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Restricted stock award grants and vesting |
— | — | — | ( |
) | — | — | |||||||||||||||||||||||||||||||||
| Common stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Preferred stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Contributions |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Distributions |
— | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Balance—June 30, 2019 |
$ | $ | $ | $ | ( |
$ | — | $ | $ | $ | |
|||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Restricted stock award grants and vesting |
— | — | — | — | ( |
) | — | — | ||||||||||||||||||||||||||||||||
| Net proceeds from sale of common stock |
— | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Common stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Preferred stock dividend distribution declared |
— | — | — | — | — | ( |
) | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
| Contributions |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Distributions |
— | — | — | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Net income |
— | — | — | — | — | ( |
) | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Other comprehensive income |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Balance—September 30, 2019 |
$ | $ | $ | $ | ( |
$ | $ | $ | $ | |
||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Nine Months Ended September 30, |
||||||||
2020 |
2019 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Net income/(loss) |
$ | $ | ( |
) | ||||
| Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Amortization of deferred financing costs and debt fair value |
||||||||
| Amortization of above and below market leases |
( |
) | ( |
) | ||||
| Straight-line rent/expense |
( |
) | ( |
) | ||||
| Non-cash stock compensation |
||||||||
| Net gain on sale of real estate property |
( |
) | ( |
) | ||||
| Changes in non-cash working capital: |
||||||||
| Rents receivable, net |
( |
) | ( |
) | ||||
| Other assets |
( |
) | ( |
) | ||||
| Accounts payable and accrued liabilities |
( |
) | ( |
) | ||||
| Deferred rent |
( |
) | ||||||
| Tenant rent deposits |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net Cash Provided By Operating Activities |
||||||||
| |
|
|
|
|||||
| Cash Flows to Investing Activities: |
||||||||
| Additions to real estate properties |
( |
) | ( |
) | ||||
| Acquisition of real estate |
( |
) | ||||||
| Net proceeds from sale of real estate. |
||||||||
| Deferred leasing costs |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net Cash Used In Investing Activities |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Cash Flows (to)/from Financing Activities: |
||||||||
| Repurchases of common stock |
( |
) | — | |||||
| Proceeds from sale of common stock |
||||||||
| Debt issuance and extinguishment costs |
( |
) | ||||||
| Proceeds from borrowings |
||||||||
| Repayment of borrowings |
( |
) | ( |
) | ||||
| Shares withheld for payment of taxes on restricted stock unit vesting |
( |
) | ( |
) | ||||
| Contributions from non-controlling interests in properties . |
||||||||
| Distributions to non-controlling interests in properties |
( |
) | ( |
) | ||||
| Dividend distributions paid to stockholders |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net Cash (Used In)/Provided By Financing Activities |
( |
) | ||||||
| |
|
|
|
|||||
| Net Decrease in Cash, Cash Equivalents and Restricted Cash |
( |
) | ( |
) | ||||
| Cash, Cash Equivalents and Restricted Cash, Beginning of Period |
||||||||
| |
|
|
|
|||||
| Cash, Cash Equivalents and Restricted Cash, End of Period |
$ | $ | ||||||
| |
|
|
|
|||||
| Reconciliation of Cash, Cash Equivalents and Restricted Cash: |
||||||||
| Cash and Cash Equivalents, End of Period |
||||||||
| Restricted Cash, End of Period |
||||||||
| |
|
|
|
|||||
| Cash, Cash Equivalents and Restricted Cash, End of Period |
$ | $ | ||||||
| |
|
|
|
|||||
| Supplemental Disclosures of Cash Flow Information: |
||||||||
| Cash paid for interest |
$ | $ | ||||||
| Purchase of additions in real estate properties included in accounts payable |
$ | $ | ||||||
| Purchase of deferred leasing costs included in accounts payable |
$ | $ | ||||||
| Debt assumed on acquisition of real estate |
$ | $ | ||||||
| Property |
Date Acquired |
Percentage Owned |
||||||
| 7601 Tech |
% | |||||||
| Cascade Station |
% | |||||||
| Canyon Park |
% | |||||||
Canyon Park |
Cascade Station |
7601 Tech |
Total Sept. 30, 2019 |
|||||||||||||
| Land |
$ |
$ |
— |
$ |
$ |
|||||||||||
| Building and improvement |
||||||||||||||||
| Tenant improvement |
||||||||||||||||
| Lease intangible assets |
||||||||||||||||
| Other assets |
||||||||||||||||
| Debt |
— |
( |
) |
— |
( |
) | ||||||||||
| Accounts payable and other liabilities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| Lease intangible liabilities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net assets acquired |
$ |
$ |
$ |
$ |
||||||||||||
| |
|
|
|
|
|
|
| |||||||||
| |
|
|
|
|
|
|
|
| Circle Point Land |
December 31, 2019 |
|||
| Real estate properties, net |
$ | |
||
| |
|
|||
| Assets held for sale |
$ | |||
| |
|
|||
| Accounts payable, accrued expenses, deferred rent and tenant rent deposits |
$ |
( |
) | |
| |
|
|||
| Liabilities related to assets held for sale |
$ | ( |
) | |
| |
|
|||
Lease Intangible Assets |
Lease Intangible Liabilities |
|||||||||||||||||||||||||||
| September 30, 2020 |
Above Market Leases |
In Place Leases |
Leasing Commissions |
Total |
Below Market Leases |
Below Market Ground Lease |
Total |
|||||||||||||||||||||
| Cost |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||||||||
| Accumulated amortization |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Lease Intangible Assets |
Lease Intangible Liabilities |
|||||||||||||||||||||||||||
| December 31, 2019 |
Above Market Leases |
In Place Leases |
Leasing Commissions |
Total |
Below Market Leases |
Below Market Ground Lease |
Total |
|||||||||||||||||||||
| Cost |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||||||||
| Accumulated amortization |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2020 |
$ | |||
| 2021 |
||||
| 2022 |
||||
| 2023 |
||||
| 2024 |
||||
| Thereafter |
||||
| |
|
|||
| $ | ||||
| |
|
| Property |
September 30, 2020 |
December 31, 2019 |
Interest Rate as of September 30, 2020 (1) |
Maturity |
||||||||||||
| Unsecured Credit Facility (3)(4) |
$ |
$ |
— |
% (2) |
||||||||||||
| Term Loan (4) |
% (2) |
|||||||||||||||
| Midland Life Insurance (5) |
% |
|||||||||||||||
| Mission City |
% |
|||||||||||||||
| Canyon Park (6) |
% |
|||||||||||||||
| 190 Office Center |
% |
|||||||||||||||
| Circle Point |
% |
|||||||||||||||
| SanTan |
% |
|||||||||||||||
| Intellicenter |
% |
|||||||||||||||
| The Quad |
% |
|||||||||||||||
| FRP Collection |
% |
|||||||||||||||
| 2525 McKinnon |
% |
|||||||||||||||
| Greenwood Blvd |
% |
|||||||||||||||
| Cascade Station |
% |
|||||||||||||||
| 5090 N 40 th St |
% |
|||||||||||||||
| AmberGlen |
% |
|||||||||||||||
| Lake Vista Pointe |
% |
|||||||||||||||
| Central Fairwinds |
% |
|||||||||||||||
| FRP Ingenuity Drive |
% |
|||||||||||||||
| Carillon Point |
% |
|||||||||||||||
| |
|
|
|
|||||||||||||
| Total Principal |
||||||||||||||||
| Deferred financing costs, net |
( |
) |
( |
) |
||||||||||||
| Unamortized fair value adjustments |
||||||||||||||||
| |
|
|
|
|||||||||||||
| Total |
$ |
$ |
||||||||||||||
| |
|
|
|
|||||||||||||
(1) |
All interest rates are fixed interest rates with the exception of the Unsecured Credit Facility (“Unsecured Credit Facility”) and the Term Loan (as defined herein), as explained in footnotes 3 and 4 below. |
| (2) | As of September 30, 2020, the one-month LIBOR rate was |
| (3) | In March 2018, the Company entered into the Credit Agreement for the Unsecured Credit Facility that provides for commitments of up to $ March and may be extended to at the Company’s option upon meeting certain conditions. Borrowings under the Unsecured Credit Facility bear interest at a rate equal to the LIBOR rate plus a margin of between |
| (4) | In September 2019, the Company entered into a five-year $ 30-day LIBOR payments. |
| (5) | The mortgage loan is cross-collateralized by Cherry Creek, City Center and 7595 Tech (formerly “DTC Crossroads”). |
| (6) | The mortgage loan anticipated repayment date (“ARD”) is March 1, 2027. The final scheduled maturity date can be extended up to 5 years beyond the ARD. If the loan is not paid off at ARD, loan’s interest rate shall be adjusted to the greater of (i) the initial interest rate plus |
| 2020 |
$ | |||
| 2021 |
||||
| 2022 |
||||
| 2023 |
||||
| 2024 |
||||
| Thereafter |
||||
| |
|
|||
| $ | ||||
| |
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
| Fixed payments |
$ |
$ | $ | $ | ||||||||||||
| Variable payments |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| $ | $ | $ | $ | |||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| 2020 |
$ | |||
| 2021 |
||||
| 2022 |
||||
| 2023 |
||||
| 2024 |
||||
| Thereafter |
||||
| |
|
|||
| $ | ||||
| |
|
September 30, 2020 |
December 31, 2019 |
|||||||
| Right-of-use |
$ |
$ |
||||||
| Lease liability – operating leases |
$ |
$ |
||||||
| Right-of-use |
$ |
$ |
||||||
| Lease liability – financing leases |
$ |
$ |
||||||
Operating Leases |
Financing Leases |
|||||||
| 2020 |
$ | $ | ||||||
| 2021 |
||||||||
| 2022 |
||||||||
| 2023 |
||||||||
| 2024 |
||||||||
| Thereafter |
||||||||
| |
|
|
|
|||||
| Total future minimum lease payments |
||||||||
| Discount |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Total |
$ | $ | ||||||
| |
|
|
|
|||||
| • | adverse economic or real estate developments in the office sector or the markets in which we operate; |
| • | changes in local, regional, national and international economic conditions, including as a result of the ongoing COVID-19 pandemic; |
| • | requests from tenants for rent deferrals, rent abatement or relief from other contractual obligations, or a failure to pay rent, as a result of changes in business behavior stemming from the ongoing COVID-19 pandemic or the availability of government assistance programs; |
| • | our inability to compete effectively; |
| • | our inability to collect rent from tenants or renew tenants’ leases on attractive terms if at all; |
| • | demand for and market acceptance of our properties for rental purposes; |
| • | defaults on or non-renewal of leases by tenants, including as a result of the ongoing COVID-19 pandemic; |
| • | increased interest rates and any resulting increase in financing or operating costs; |
| • | decreased rental rates or increased vacancy rates, including as a result of changes in business behavior or market dynamics related to the ongoing COVID-19 pandemic; |
| • | our failure to obtain necessary financing or access the capital markets on favorable terms or at all; |
| • | changes in the availability of acquisition opportunities; |
| • | availability of qualified personnel; |
| • | our inability to successfully complete real estate acquisitions or dispositions on the terms and timing we expect, or at all; |
| • | our failure to successfully operate acquired properties and operations; |
| • | changes in our business, financing or investment strategy or the markets in which we operate; |
| • | our failure to generate sufficient cash flows to service our outstanding indebtedness; |
| • | environmental uncertainties and risks related to adverse weather conditions and natural disasters; |
| • | our failure to qualify and maintain our status as a real estate investment trust (“REIT”); |
| • | government approvals, actions and initiatives, including the need for compliance with environmental requirements or actions in response to the COVID-19 pandemic; |
| • | outcome of claims and litigation involving or affecting us; |
| • | financial market fluctuations; |
| • | changes in real estate, taxation and zoning laws and other legislation and government activity and changes to real property tax rates and the taxation of REITs in general; and |
| • | other factors described in our news releases and filings with the Securities and Exchange Commission (the “SEC”), including but not limited to those described in our Annual Report on Form 10-K for the year ended December 31, 2019 under the heading “Risk Factors” and in our subsequent reports filed with the SEC. |
| Metropolitan Area |
Property |
Economic Interest |
NRA (000s Square Feet) |
In Place Occupancy |
Annualized Base Rent per Square Foot |
Annualized Gross Rent per Square Foot (1) |
Annualized Base Rent (2) ($000s) |
|||||||||||||||||||
| Phoenix, AZ |
Pima Center | 100.0 | % | 272 | 85.0 | % | $ | 27.58 | $ | 27.58 | $ | 6,371 | ||||||||||||||
| SanTan |
100.0 | % | 267 | 93.1 | % | $ | 28.75 | $ | 28.75 | $ | 7,133 | |||||||||||||||
| 5090 N 40 th St |
100.0 | % | 175 | 95.8 | % | $ | 29.79 | $ | 29.79 | $ | 4,998 | |||||||||||||||
| Camelback Square |
100.0 | % | 174 | 79.8 | % | $ | 29.50 | $ | 29.50 | $ | 4,098 | |||||||||||||||
| The Quad |
100.0 | % | 163 | 100.0 | % | $ | 30.11 | $ | 30.43 | $ | 4,909 | |||||||||||||||
| Papago Tech |
100.0 | % | 163 | 90.9 | % | $ | 22.63 | $ | 22.63 | $ | 3,347 | |||||||||||||||
| Denver, CO |
Cherry Creek | 100.0 | % | 356 | 100.0 | % | $ | 18.95 | $ | 19.67 | $ | 6,740 | ||||||||||||||
| Circle Point |
100.0 | % | 272 | 94.3 | % | $ | 18.16 | $ | 32.16 | $ | 4,658 | |||||||||||||||
| Denver Tech (3) |
100.0 | % | 381 | 93.7 | % | $ | 23.02 | $ | 27.08 | $ | 8,213 | |||||||||||||||
| Superior Pointe |
100.0 | % | 151 | 94.6 | % | $ | 18.16 | $ | 30.62 | $ | 2,600 | |||||||||||||||
| Tampa, FL |
Park Tower | 94.8 | % | 471 | 88.3 | % | $ | 26.47 | $ | 26.47 | $ | 11,015 | ||||||||||||||
| City Center |
95.0 | % | 242 | 90.3 | % | $ | 26.26 | $ | 26.26 | $ | 5,748 | |||||||||||||||
| Intellicenter |
100.0 | % | 204 | 100.0 | % | $ | 24.53 | $ | 24.53 | $ | 4,993 | |||||||||||||||
| Carillon Point |
100.0 | % | 124 | 100.0 | % | $ | 28.77 | $ | 28.77 | $ | 3,572 | |||||||||||||||
| Orlando, FL |
Florida Research Park (4) |
96.6 | % | 397 | 98.5 | % | $ | 23.44 | $ | 26.87 | $ | 9,147 | ||||||||||||||
| Central Fairwinds |
97.0 | % | 168 | 90.5 | % | $ | 26.20 | $ | 26.20 | $ | 3,990 | |||||||||||||||
| Greenwood Blvd |
100.0 | % | 155 | 100.0 | % | $ | 23.25 | $ | 23.25 | $ | 3,605 | |||||||||||||||
| San Diego, CA |
Sorrento Mesa | 100.0 | % | 296 | 85.3 | % | $ | 26.02 | $ | 34.02 | $ | 6,570 | ||||||||||||||
| Mission City |
100.0 | % | 281 | 91.1 | % | $ | 36.35 | $ | 36.35 | $ | 9,316 | |||||||||||||||
| Dallas, TX |
190 Office Center | 100.0 | % | 303 | 81.2 | % | $ | 25.65 | $ | 25.65 | $ | 6,313 | ||||||||||||||
| Lake Vista Pointe |
100.0 | % | 163 | 100.0 | % | $ | 16.50 | $ | 25.50 | $ | 2,695 | |||||||||||||||
| 2525 McKinnon |
100.0 | % | 111 | 91.6 | % | $ | 28.60 | $ | 45.60 | $ | 2,918 | |||||||||||||||
| Portland, OR |
AmberGlen | 76.0 | % | 203 | 98.4 | % | $ | 22.01 | $ | 24.55 | $ | 4,388 | ||||||||||||||
| Cascade Station |
100.0 | % | 128 | 100.0 | % | $ | 27.12 | $ | 28.49 | $ | 3,457 | |||||||||||||||
| Seattle, WA |
Canyon Park | 100.0 | % | 207 | 100.0 | % | $ | 21.84 | $ | 29.84 | $ | 4,515 | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total / Weighted Average – September 30, 2020 (5) |
|
5,827 |
93.1 |
% |
$ |
24.95 |
$ |
27.91 |
$ |
135,309 |
||||||||||||||||
| |
|
|
|
|||||||||||||||||||||||
| (1) | Annualized gross rent per square foot includes adjustment for estimated expense reimbursements of triple net leases for the year ended September 30, 2020. |
| (2) | Annualized base rent is calculated by multiplying (i) rental payments (defined as cash rents before abatements) for the month ended September 30, 2020 by (ii) 12. |
| (3) | Denver Tech is comprised of 7601 Tech and 7595 Tech (formerly “DTC Crossroads”). |
| (4) | Florida Research Park is comprised of FRP Collection and FRP Ingenuity Drive. |
| (5) | Averages weighted based on the property’s NRA, adjusted for occupancy. |
Payments Due by Period |
||||||||||||||||||||
| Contractual Obligations |
Total |
2020 |
2021-2022 |
2023-2024 |
More than 5 years |
|||||||||||||||
| Principal payments on mortgage loans |
$ | 682,585 | $ | 1,571 | $ | 170,885 | $ | 173,254 | $ | 336,875 | ||||||||||
| Interest payments (1) |
119,184 | 6,425 | 44,222 | 37,089 | 31,448 | |||||||||||||||
| Tenant-related commitments |
7,467 | 2,310 | 5,157 | — | — | |||||||||||||||
| Lease obligations |
29,665 | 52 | 1,669 | 1,264 | 26,680 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
$ | 838,901 | $ | 10,358 | $ | 221,933 | $ | 211,607 | $ | 395,003 | ||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | Contracted interest on the floating rate borrowings under our Unsecured Credit Facility was calculated based on the balance and interest rate at September 30, 2020. Contracted interest on the Term Loan was calculated based on the Interest Rate Swap rate fixing the LIBOR component of the borrowing rate to approximately 1.27%. |
| • | a complete or partial closure of, decline or cessation in the usage of, or other operational issues at, one or more of our properties resulting from government or tenant action; |
| |
• | the reduced economic activity severely impacts our tenants’ businesses, financial condition, liquidity and creditworthiness, which may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, seek modifications of such obligations or exercise early termination rights; |
| • | a decrease in the usage of our properties or the demand for office space, or the Company’s ability to maintain or increase rents, which may have an adverse effect on our financial condition, results of operations and cash flow than if we owned a more diversified real estate portfolio; |
| • | difficulty accessing sources of capital on attractive terms, or at all, impacts to our credit ratings, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to debt or equity capital necessary to fund future capital needs (including redevelopment, acquisition, expansion and renovation activities, payments of principal and interest on and the refinancing of our existing debt, tenant improvements and leasing costs) or refinancings on a timely basis and our tenants’ ability to fund their business operations and meet their obligations to us; |
| • | the financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our Unsecured Credit Facility, including the Term Loan, and other debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings and pay dividends on our common stock or preferred stock; |
| • | any impairment in value of our tangible or intangible assets which could be recorded as a result of a weaker economic conditions; |
| • | a general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties due to a lack of suitable acquisition opportunities; |
| • | a general decline in the attractiveness of our properties due to changes in the demand for office space, which may adversely impact our ability to consummate pending or future dispositions on terms that allow us to recover expected carrying values of a real estate investment; and |
| • | the potential negative impact on the health of a significant number of our employees could result in a deterioration in our ability to ensure business continuity or maintain adequate disclosure reporting or internal controls through the duration of this disruption. |
Issuer Purchases of Equity Securities |
||||||||||||||||
| Period |
Total Number of Shares of Common Stock Purchased |
Average Price Paid per Share of Common Stock Repurchased |
Total Number of Shares of Common Stock Purchased as Part of Share Repurchase Plans |
Approximate Dollar Value of Shares of Common Stock that May Yet Be Purchased Under the Share Repurchase Plans (1) (thousands) |
||||||||||||
| July 1 – 31, 2020 |
1,114,196 | $ | 9.58 | 1,114,196 | $ | — | ||||||||||
| August 1 – 31, 2020 |
— | — | — | 50,000 | ||||||||||||
| September 1 – 30, 2020 |
— | — | — | 50,000 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total |
1,114,196 | $ | 9.58 | 1,114,196 | $ | 50,000 | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (1) | Represents approximate dollar value of shares that could have been purchased under the plans in effect at the end of the month. |
| By: | /s/ James Farrar | |
| James Farrar | ||
Chief Executive Officer and Director | ||
(Principal Executive Officer) | ||
| By: | /s/ Anthony Maretic | |
| Anthony Maretic | ||
Chief Financial Officer, Secretary and Treasurer | ||
(Principal Financial Officer and Principal Accounting Officer) | ||
Exhibit 31.1
Certification
I, James Farrar, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2020 of City Office REIT, 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 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 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. |
| November 5, 2020 | /s/ James Farrar | |
| Date | James Farrar Chief Executive Officer and Director (Principal Executive Officer) |
Exhibit 31.2
Certification
I, Anthony Maretic, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2020 of City Office REIT, 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 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 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. |
| November 5, 2020 | /s/ Anthony Maretic | |
| Date | Anthony Maretic Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
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 this Quarterly Report on Form 10-Q for the period ended September 30, 2020 of City Office REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James Farrar, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| November 5, 2020 | /s/ James Farrar | |
| Date | James Farrar Chief Executive Officer and Director (Principal Executive Officer) |
This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to City Office REIT, Inc. and will be retained by City Office REIT, Inc. 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 this Quarterly Report on Form 10-Q for the period ended September 30, 2020 of City Office REIT, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Maretic, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| November 5, 2020 | /s/ Anthony Maretic | |
| Date | Anthony Maretic Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
This written report is being furnished to the Securities and Exchange Commission as an exhibit to the Report. A signed original of this written statement required by Section 906 has been provided to City Office REIT, Inc. and will be retained by City Office REIT, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Consolidated Balance Sheets (Parenthetical) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
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| Statement of Financial Position [Abstract] | ||
| Preferred stock, Dividend rate percentage | 6.625% | 6.625% |
| Preferred stock, par value per share | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 5,600,000 | 5,600,000 |
| Preferred stock, shares issued | 4,480,000 | 4,480,000 |
| Preferred stock, shares outstanding | 4,480,000 | 4,480,000 |
| Common stock, par value | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 100,000,000 | 100,000,000 |
| Common stock, shares issued | 43,397,117 | 54,591,047 |
| Common stock, shares outstanding | 43,397,117 | 54,591,047 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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| Income Statement [Abstract] | ||||
| Rental and other revenues | $ 41,261 | $ 38,946 | $ 121,000 | $ 117,236 |
| Operating expenses: | ||||
| Property operating expenses | 14,886 | 14,384 | 43,666 | 42,754 |
| General and administrative | 2,546 | 2,775 | 8,025 | 8,435 |
| Depreciation and amortization | 15,189 | 15,035 | 45,222 | 44,057 |
| Total operating expenses | 32,621 | 32,194 | 96,913 | 95,246 |
| Operating income | 8,640 | 6,752 | 24,087 | 21,990 |
| Interest expense: | ||||
| Contractual interest expense | (6,620) | (7,378) | (19,773) | (22,022) |
| Amortization of deferred financing costs and debt fair value | (328) | (321) | (993) | (992) |
| Interest expense, net | (6,948) | (7,699) | (20,766) | (23,014) |
| Net gain on sale of real estate property | 1,347 | 1,347 | 478 | |
| Net income/(loss) | 3,039 | (947) | 4,668 | (546) |
| Net income attributable to non-controlling interests in properties | (153) | (164) | (514) | (498) |
| Net income/(loss) attributable to the Company | 2,886 | (1,111) | 4,154 | (1,044) |
| Preferred stock distributions | (1,855) | (1,855) | (5,565) | (5,565) |
| Net income/(loss) attributable to common stockholders | $ 1,031 | $ (2,966) | $ (1,411) | $ (6,609) |
| Net income/(loss) per common share: | ||||
| Basic | $ 0.02 | $ (0.07) | $ (0.03) | $ (0.16) |
| Diluted | $ 0.02 | $ (0.07) | $ (0.03) | $ (0.16) |
| Weighted average common shares outstanding: | ||||
| Basic | 43,593 | 42,591 | 48,508 | 40,610 |
| Diluted | 44,014 | 42,591 | 48,508 | 40,610 |
| Dividend distributions declared per common share | $ 0.150 | $ 0.235 | $ 0.450 | $ 0.705 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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| Statement of Comprehensive Income [Abstract] | ||||
| Net income/(loss) | $ 3,039 | $ (947) | $ 4,668 | $ (546) |
| Other comprehensive income/(loss): | ||||
| Unrealized cash flow hedge (loss)/gain | (7) | 279 | (3,091) | 279 |
| Amounts reclassified to interest expense | 141 | (32) | 186 | (32) |
| Other comprehensive income/(loss) | 134 | 247 | (2,905) | 247 |
| Comprehensive income/(loss) | 3,173 | (700) | 1,763 | (299) |
| Comprehensive income attributable to non-controlling interests in properties | (153) | (164) | (514) | (498) |
| Comprehensive income/(loss) attributable to the Company | 3,020 | (864) | 1,249 | (797) |
| Preferred stock distributions | (1,855) | (1,855) | (5,565) | (5,565) |
| Comprehensive income/(loss) attributable to common stockholders | $ 1,165 | $ (2,719) | $ (4,316) | $ (6,362) |
Organization and Description of Business |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and Description of Business | 1. Organization and Description of Business City Office REIT, Inc. (the “Company”) was organized in the state of Maryland on November 26, 2013. On April 21, 2014, the Company completed its initial public offering (“IPO”) of shares of the Company’s common stock. The Company contributed the net proceeds of the IPO to City Office REIT Operating Partnership, L.P., a Maryland limited partnership (the “Operating Partnership”), in exchange for common units of limited partnership interest in the Operating Partnership (“common units”). The Company’s interest in the Operating Partnership entitles the Company to share in distributions from, and allocations of profits and losses of, the Operating Partnership in proportion to the Company’s percentage ownership of common units. As the sole general partner of the Operating Partnership, the Company has the exclusive power under the Operating Partnership’s partnership agreement to manage and conduct the Operating Partnership’s business, subject to limited approval and voting rights of the limited partners. The Company has elected to be taxed and will continue to operate in a manner that will allow it to continue to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to qualification as a REIT, the Company will be permitted to deduct dividend distributions paid to its stockholders, eliminating the U.S. federal taxation of income represented by such distributions at the Company level. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal and state income tax on its taxable income at regular corporate tax rates and, for tax years beginning before 2018, any applicable alternative minimum tax. |
Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2020 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Preparation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board established Topic 848, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, by issuing Accounting Standards Update (“ASU”) No. 2020-04. ASU 2020-04 provides companies with optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. For contracts affected by reference rate reform, if certain criteria are met, companies can elect to not remeasure contracts at the modification date or reassess a previous accounting conclusion. Companies can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met. ASU 2020-04 can be applied as of the beginning of the interim period that includes March 12, 2020, however, the guidance will only be available for optional use through December 31, 2022. The new standard applies prospectively to contract modifications and hedging relationships and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of ASU 2020-04 on its consolidated financial statements and may elect optional expedients in future periods as reference rate reform activities occur. On April 10, 2020, the Financial Accounting Standards Board (the “FASB”) issued a Staff Q&A to respond to some frequently asked questions about accounting for rent relief related to the effects of the
COVID-19 pandemic. Consequently, for rent relief related to the effects of the COVID-19 pandemic, an entity will not be required to analyze each contract to determine whether enforceable rights and obligations for abatements exist in the contract and can elect to apply or not apply the lease modification guidance to those contracts. Entities may make the elections for any lessor-provided rent relief related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, reduced future lease payments, etc.) as long as the rent relief does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. To date, the Company granted rent relief to certain tenants, most often in the form of a rent deferral or rent abatement. For rent relief granted that did not result in a substantial increase in the rights of the lessor or the obligations of the lessee, the Company elected to not apply the lease modification guidance and instead account for the rent relief as though the enforceable rights and obligations for the relief existed in the original contract. For rent relief granted that resulted in a substantial increase in the rights of the lessor or the obligations of the lessee, the Company applied the lease modification guidance to the applicable contracts. |
Real Estate Investments |
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| Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Real Estate Investments | 3. Real Estate Investments Acquisitions During the nine months ended September 30, 2020 and 2019 the Company acquired the following properties:
The foregoing acquisitions were accounted for as asset acquisitions. The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed during the nine months ended September 30, 2019 (in thousands):
The acquisition of the Cascade Station property was partially funded through an assumption of debt in the amount of $22.5 million. Sale of Real Estate Property On July 23, 2020, the Company sold a land parcel at the Circle Point property in Denver, Colorado for $6.5 million, resulting in an aggregate gain of $1.3 million net of disposal-related costs, which has been classified as net gain on sale of real estate property in the condensed consolidated statements of operations. On May 7, 2019, the Company sold the 10455 Pacific Center building of the Sorrento Mesa property in San Diego, California for $16.5 million, resulting in an aggregate gain of $0.5 million net of disposal-related costs, which has been classified as net gain on sale of real estate property in the condensed consolidated statements of operations. On February 7, 2019, the Company sold the Plaza 25 property in Denver, Colorado for $17.9 million. No gain or loss was recognized on the sale as the property was carried at fair value less cost to sell on the date of disposition. Assets Held for Sale On May 10, 2019, the Company entered into a purchase and sale agreement to sell a land parcel at the Circle Point property for $6.5 million. The Company determined that the land parcel met the criteria for classification as held for sale as of December 31, 2019. On July 23, 2020, the Company completed the sale of the land parcel at the Circle Point property. The property was classified as held for sale as of December 31, 2019 (in thousands):
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Lease Intangibles |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease Intangibles | 4. Lease Intangibles Lease intangibles and the value of assumed lease obligations as of September 30, 2020 and December 31, 2019 were comprised as follows (in thousands):
The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):
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Debt |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | 5. Debt The following table summarizes the indebtedness as of September 30, 2020 and December 31, 2019 (dollars in thousands):
The scheduled principal repayments of debt as of September 30, 2020 are as follows (in thousands):
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Fair Value of Financial Instruments |
9 Months Ended |
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Sep. 30, 2020 | |
| Fair Value Disclosures [Abstract] | |
| Fair Value of Financial Instruments | 6. Fair Value of Financial Instruments Fair value measurements are based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy for inputs used in measuring fair value is as follows: Level 1 Inputs – quoted prices in active markets for identical assets or liabilities Level 2 Inputs – observable inputs other than quoted prices in active markets for identical assets and liabilities Level 3 Inputs – unobservable inputs In September 2019, the Company entered into a five-year Interest Rate Swap for a notional amount of $50 million. Pursuant to the Interest Rate Swap, the Company will pay a fixed rate of approximately 1.27% of the notional amount annually, payable monthly, and receive floating rate 30-day LIBOR payments. Accordingly, the fair value of the Interest Rate Swap has been classified as a Level 2 fair value measurement.The Interest Rate Swap has been designated and qualifies as a cash flow hedge and has been recognized on the condensed consolidated balance sheets at fair value. Gains and losses resulting from changes in the fair value of derivatives that have been designated and qualify as cash flow hedges are reported as a component of other comprehensive income/(loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings. As of September 30, 2020, the Interest Rate Swap was reported as a liability at its fair value of approximately $2.2 million, which is included in other liabilities on the Company’s condensed consolidated balance sheet. For the nine months ended September 30, 2020 approximately $0.2 million of realized losses were reclassified to interest expense due to payments made to the swap counterparty. As of December 31, 2019, the Interest Rate Swap was reported as an asset at its fair value of approximately $0.7 million, which is included in other assets on the Company’s condensed consolidated balance sheet.Cash, Cash Equivalents, Restricted Cash, Rents Receivable, Accounts Payable and Accrued Liabilities The Company estimates that the fair value approximates carrying value due to the relatively short-term nature of these instruments. Fair Value of Financial Instruments Not Carried at Fair Value With the exception of fixed rate mortgage loans payable, the carrying amounts of the Company’s financial instruments approximate their fair value. The Company determines the fair value of its fixed rate mortgage loan payable based on a discounted cash flow analysis using a discount rate that approximates the current borrowing rates for instruments of similar maturities. Based on this, the Company has determined that the fair value of these instruments was $579.8 million and $576.9 million as of September 30, 2020 and December 31, 2019, respectively. Accordingly, the fair value of mortgage loans payable have been classified as Level 3 fair value measurements. |
Related Party Transactions |
9 Months Ended |
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Sep. 30, 2020 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | 7. Related Party Transactions Administrative Services Agreement For the nine months ended September 30, 2020 and 2019, the Company earned $0.3 million and $0.4 million, respectively, in administrative services performed for Second City Real Estate II Corporation and its affiliates (“Second City”). Also during the nine months ended September 30, 2019, the Company was assigned a purchase contract which had been entered into by an entity affiliated with principals of Second City, which principals are also officers of the Company. The Company subsequently assigned the purchase contract to a third party during the nine months ended September 30, 2019. The Company paid no consideration to the related party for the contract other than return of deposits which the Company subsequently recovered from a third party in addition to an assignment fee. The Company recognized income of $2.6 million on the assignment of the purchase contract to the third party, which was recorded in rental and other revenues on the condensed consolidated statement of operations. On July 31, 2019, an indirect, wholly-owned subsidiary of the Company entered into an Administrative Services Agreement (the “Administrative Services Agreement”) with Clarity Real Estate III GP, Limited Partnership and Clarity Real Estate Ventures GP, Limited Partnership (together, “Clarity”), entities affiliated with principals of Second City and officers of the Company. Pursuant to the Administrative Services Agreement, the Company will provide various administrative services and support to the related entities managing the Clarity funds. During the nine months ended September 30, 2020, the Company earned $0.2 million in administrative services performed for Clarity. During the nine months ended September 30, 2019, the amounts earned by the Company for the administrative services performed for Clarity were nominal. |
Leases |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | 8. Leases Lessor Accounting The Company is focused on acquiring, owning and operating high-quality office properties for lease to a stable and diverse tenant base. Our properties have both full-service gross and net leases which are generally classified as operating leases. Rental income related to such leases is recognized on a straight-line basis over the remaining lease term. The Company’s total revenue includes fixed base rental payments provided under the lease and variable payments which principally consist of tenant expense reimbursements for certain property operating expenses. The Company recognized fixed and variable lease payments for the three and nine months ended September 30, 2020 and the three and nine months ended September 30, 2019 as follows (in thousands):
Future minimum lease payments to be received by the Company as of September 30, 2020 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):
The Company’s leases may include various provisions such as scheduled rent increases, renewal options and termination options. The majority of the Company’s leases include defined rent increase rather than variable payments based on an index or unknown rate. Lessee Accounting As a lessee, the Company has ground and office leases which are classified as operating and financing leases. As of September 30, 2020, these leases had remaining terms of 1 to 68 years and a weighted average remaining lease term of 56 years. Right-of-use
Lease liabilities are measured at the commencement date based on the present value of future lease payments. One of the Company’s operating ground leases includes rental payment increases over the lease term based on increases in the Consumer Price Index (“CPI”). Changes in the CPI were not estimated as part of the measurement of the operating lease liability. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 6.3% in determining its lease liabilities. The discount rates were derived from the Company’s assessment of the credit quality of the Company and adjusted to reflect secured borrowing, estimated yield curves and long-term spread adjustments. Right-of-use Operating lease expenses for the three and nine months ended September 30, 2020 were $0.2 million and $0.6 million, respectively. Operating lease expenses for the three and nine months ended September 30, 2019 were $0.2 million and $0.6 million, respectively. Financing lease expenses for the three and nine months ended September 30, 2020 and 2019 were nominal. Future minimum lease payments to be paid by the Company as a lessee for operating and financing leases as of September 30, 2020 for the next five years and thereafter are as follows (in thousands):
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Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | 9. Commitments and Contingencies The Company is obligated under certain tenant leases to fund tenant improvements and the expansion of the underlying leased properties. Under various federal, state and local laws, ordinances and regulations relating to the protection of the environment, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of certain hazardous or toxic substances disposed, stored, generated, released, manufactured or discharged from, on, at, under, or in a property. As such, the Company may be potentially liable for costs associated with any potential environmental remediation at any of its formerly or currently owned properties. The Company believes that it is in compliance in all material respects with all federal, state and local ordinances and regulations regarding hazardous or toxic substances. Management is not aware of any environmental liability that it believes would have a material adverse impact on the Company’s financial position or results of operations. Management is unaware of any instances in which the Company would incur significant environmental costs if any or all properties were sold, disposed of or abandoned. However, there can be no assurance that any such non-compliance, liability, claim or expenditure will not arise in the future.The Company is involved from time to time in lawsuits and other disputes which arise in the ordinary course of business. As of September 30, 2020, management believes that these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s financial position or results of operations. |
Stockholders' Equity |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Federal Home Loan Banks [Abstract] | |
| Stockholders' Equity | 10. Stockholders’ Equity Share Repurchase Plan On March 9, 2020, the Company’s Board of Directors approved a share repurchase plan authorizing the Company to repurchase up to $100 million of its outstanding shares of common stock. In July 2020, the Company completed the full March 2020 share repurchase plan. On August 5, 2020, the Company’s Board of Directors approved an additional share repurchase plan authorizing the Company to repurchase up to an additional aggregate amount of $50 million of its outstanding shares of common stock. Under the share repurchase programs, the shares may be repurchased from time to time using a variety of methods, which may include open market transactions, privately negotiated transactions or otherwise, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements. Repurchased shares of common stock will be classified as authorized and unissued shares. The Company recognizes the cost of shares of common stock it repurchases, including direct costs incurred, as a reduction in stockholders’ equity. Such reductions of stockholders equity due to the repurchases of shares of common stock will be applied first, to reduce common stock in the amount of the par value associated with the shares of common stock repurchased and second, to reduce additional paid-in capital by the amount that the purchase price for the shares of common stock repurchased exceed the par value. During the nine months ended September 30, 2020, the Company completed the repurchase of 11,363,851 shares of its common stock for approximately $100.0 million. There were no shares repurchased during the nine months ended September 30, 2019. Common Stock and Common Unit Distributions On September 15, 2020, the Company’s Board of Directors approved and the Company declared a cash dividend distribution of $0.15 per common share for the quarterly period ended September 30, 2020. The dividend was paid subsequent to quarter end on October 22, 2020 to common stockholders and common unitholders of record as of the close of business on October 8, 2020, resulting in an aggregate payment of $6.5 million. Preferred Stock Distributions On September 15, 2020 the Company’s Board of Directors approved and the Company declared a cash dividend of $0.4140625 per share of the Company’s 6.625% Series A Preferred Stock (“Series A Preferred Stock”) for an aggregate amount of $1.9 million for the quarterly period ended September 30, 2020. The dividend was paid subsequent to quarter end on October 22, 2020 to the holders of record of Series A Preferred Stock as of the close of business on October 8, 2020. Equity Incentive Plan The Company has an non-executive employees, and with approval of the Board of Directors, for subsidiaries and their respective affiliates. The Equity Incentive Plan provides for grants of restricted common stock, restricted stock units, phantom shares, stock options, dividend equivalent rights and other equity-based awards (including LTIP Units), subject to the total number of shares available for issuance under the plan. The Equity Incentive Plan is administered by the compensation committee of the Board of Directors (the “Plan Administrator”). On May 2, 2019, the Company’s stockholders approved an amendment to the Equity Incentive Plan increasing the maximum number of shares of common stock that may be issued under the Equity Incentive Plan from 1,263,580 shares to 2,263,580 shares. To the extent an award granted under the Equity Incentive Plan expires or terminates, the shares subject to any portion of the award that expires or terminates without having been exercised or paid, as the case may be, will again become available for the issuance of additional awards. On January 27, 2020, each of the Board of Directors and the Compensation Committee approved a new form of performance-based restricted unit award agreement (the “Performance RSU Award Agreement”) that will be used to grant performance-based restricted stock unit awards (“Performance RSU Awards”) pursuant to the Equity Incentive Plan. The Performance RSU Awards are based upon the total stockholder return (“TSR”) of the Company’s common stock over a -year measurement period beginning January 1, 2020 and ending on December 31, 2022 (the “Measurement Period”) relative to the TSR of the companies in the SNL US REIT Office index as of January 2, 2020 (the “2020 RSU Peer Group”). The payouts under the Performance RSU Awards are evaluated on a sliding scale as follows: TSR below the 30th percentile of the 2020 RSU Peer Group would result in a 50% payout; TSR at the 50th percentile of the 2020 RSU Peer Group would result in a 100% payout; and TSR at or above the 75th percentile of the 2020 RSU Peer Group would result in a 150% payout. Payouts are mathematically interpolated between these stated percentile targets, subject to a 150% maximum. To the extent earned, the payouts of the Performance RSU Awards are intended to be settled in the form of shares of the Company’s common stock, pursuant to the Equity Incentive Plan. Upon satisfaction of the vesting conditions, dividend equivalents in an amount equal to all regular and special dividends declared with respect to the Company’s common stock during each annual measurement period during the Measurement Period are determined and paid on a cumulative, reinvested basis over the term of the applicable Performance RSU Award, at the time such award vests and based on the number of shares of the Company’s common stock that are earned. During the nine months ended September 30, 2020, 147,050 restricted stock units (“RSUs”) were granted to executive officers, directors and certain non-executive employees with a fair value of $2.0 million. The RSU awards will vest in three equal, annual installments on each of the first anniversaries of the date of grant. For the three and nine months ended September 30, 2020, the Company recognized net compensation expense of $0.5 and $1.4 million, respectively, related to the RSUs. For the three and nine months ended September 30, 2019, the Company recognized net compensation expense of $0.4 million and $1.3 million, respectively, related to the RSUs. During the nine months ended September 30, 2020, 97,500 Performance RSU Awards were granted to executive officers with a fair value of $1.3 million. The Performance RSU Awards will vest on the last day of the -year measurement period of January 1, 2020 through December 31, 2022. For the three and nine months ended September 30, 2020, the Company recognized net compensation expense of $0.1 million and $0.3 million, respectively, related to the Performance RSU Awards. There was no compensation expense related to the Performance RSU Awards for the three and nine months ended September 30, 2019. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Accounting Policies [Abstract] | |
| Basis of Preparation and Summary of Significant Accounting Policies | Basis of Preparation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America (“US GAAP”) and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2019. |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board established Topic 848, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, by issuing Accounting Standards Update (“ASU”) No. 2020-04. ASU 2020-04 provides companies with optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. For contracts affected by reference rate reform, if certain criteria are met, companies can elect to not remeasure contracts at the modification date or reassess a previous accounting conclusion. Companies can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met. ASU 2020-04 can be applied as of the beginning of the interim period that includes March 12, 2020, however, the guidance will only be available for optional use through December 31, 2022. The new standard applies prospectively to contract modifications and hedging relationships and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of ASU 2020-04 on its consolidated financial statements and may elect optional expedients in future periods as reference rate reform activities occur. On April 10, 2020, the Financial Accounting Standards Board (the “FASB”) issued a Staff Q&A to respond to some frequently asked questions about accounting for rent relief related to the effects of the
COVID-19 pandemic. Consequently, for rent relief related to the effects of the COVID-19 pandemic, an entity will not be required to analyze each contract to determine whether enforceable rights and obligations for abatements exist in the contract and can elect to apply or not apply the lease modification guidance to those contracts. Entities may make the elections for any lessor-provided rent relief related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments, reduced future lease payments, etc.) as long as the rent relief does not result in a substantial increase in the rights of the lessor or the obligations of the lessee. To date, the Company granted rent relief to certain tenants, most often in the form of a rent deferral or rent abatement. For rent relief granted that did not result in a substantial increase in the rights of the lessor or the obligations of the lessee, the Company elected to not apply the lease modification guidance and instead account for the rent relief as though the enforceable rights and obligations for the relief existed in the original contract. For rent relief granted that resulted in a substantial increase in the rights of the lessor or the obligations of the lessee, the Company applied the lease modification guidance to the applicable contracts. |
Real Estate Investments (Tables) |
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| Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Acquired Properties | During the nine months ended September 30, 2020 and 2019 the Company acquired the following properties:
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| Schedule of Allocation of Purchase Price of Assets Acquired and Liabilities Assumed | The following table summarizes the Company’s allocation of the purchase price of assets acquired and liabilities assumed during the nine months ended September 30, 2019 (in thousands):
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| Schedule of Property Classified as Held for Sale | The property was classified as held for sale as of December 31, 2019 (in thousands):
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Lease Intangibles (Tables) |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Lease Intangibles and Value of Assumed Lease Obligations | Lease intangibles and the value of assumed lease obligations as of September 30, 2020 and December 31, 2019 were comprised as follows (in thousands):
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| Estimated Aggregate Amortization Expense for Lease Intangibles | The estimated aggregate amortization expense for lease intangibles for the next five years and in the aggregate are as follows (in thousands):
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Debt (Tables) |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Outstanding Indebtness | The following table summarizes the indebtedness as of September 30, 2020 and December 31, 2019 (dollars in thousands):
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| Schedule of Principal Repayments of Mortgage Payable | The scheduled principal repayments of debt as of September 30, 2020 are as follows (in thousands):
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Lease Lease Income | The Company recognized fixed and variable lease payments for the three and nine months ended September 30, 2020 and the three and nine months ended September 30, 2019 as follows (in thousands):
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| Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments to be received by the Company as of September 30, 2020 under non-cancellable operating leases for the next five years and thereafter are as follows (in thousands):
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| Schedule Of Supplemental Balance Sheet Information Related To Leases | Right-of-use
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| Schedule future minimum lease payments to be paid | Future minimum lease payments to be paid by the Company as a lessee for operating and financing leases as of September 30, 2020 for the next five years and thereafter are as follows (in thousands):
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Organization and Description of Business - Additional Information (Detail) |
9 Months Ended |
|---|---|
Sep. 30, 2020 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Company formation date | Nov. 26, 2013 |
| Operation commencement date | Apr. 21, 2014 |
Real Estate Investments - Schedule of Acquired Properties through Operating Partnership (Detail) |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| 7601 Tech [Member] | |
| Acquisitions [Line Items] | |
| Real estate property, date acquired, asset acquisitions | 2019-09 |
| Real estate property, percentage owned, asset acquisitions | 100.00% |
| Canyon Park [Member] | |
| Acquisitions [Line Items] | |
| Real estate property, date acquired, asset acquisitions | 2019-02 |
| Real estate property, percentage owned, asset acquisitions | 100.00% |
| Cascade Station [Member] | |
| Acquisitions [Line Items] | |
| Real estate property, date acquired, asset acquisitions | 2019-06 |
| Real estate property, percentage owned, asset acquisitions | 100.00% |
Real Estate Investments - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jul. 23, 2020 |
May 10, 2019 |
May 07, 2019 |
Feb. 07, 2019 |
Sep. 30, 2020 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Real Estate [Line Items] | |||||||
| Net gain on sale of real estate property | $ 1,347 | $ 1,347 | $ 478 | ||||
| Debt Assumed | 22,473 | ||||||
| Plaza 25 [Member] | |||||||
| Real Estate [Line Items] | |||||||
| Proceeds of sale of property | $ 17,900 | ||||||
| Sorrento Mesa [Member] | |||||||
| Real Estate [Line Items] | |||||||
| Proceeds of sale of property | $ 16,500 | ||||||
| Net gain on sale of real estate property | $ 500 | ||||||
| Cascade Station [Member] | |||||||
| Real Estate [Line Items] | |||||||
| Debt Assumed | $ 22,500 | ||||||
| Circle Point Land [Member] | |||||||
| Real Estate [Line Items] | |||||||
| Proceeds of sale of property | $ 6,500 | $ 6,500 | |||||
| Net gain on sale of real estate property | $ 1,300 | ||||||
Real Estate Investments - Schedule of Property Classified as Held for Sale (Detail) $ in Thousands |
Dec. 31, 2019
USD ($)
|
|---|---|
| Long Lived Assets Held-for-sale [Line Items] | |
| Assets held for sale | $ 4,514 |
| Liabilities related to assets held for sale | (67) |
| Circle Point Land [Member] | |
| Long Lived Assets Held-for-sale [Line Items] | |
| Assets held for sale | 4,514 |
| Liabilities related to assets held for sale | (67) |
| Circle Point Land [Member] | Real estate properties, net [Member] | |
| Long Lived Assets Held-for-sale [Line Items] | |
| Assets held for sale | 4,514 |
| Circle Point Land [Member] | Accounts payable, accrued expenses, deferred rent and tenant rent deposits [Member] | |
| Long Lived Assets Held-for-sale [Line Items] | |
| Liabilities related to assets held for sale | $ (67) |
Lease Intangibles - Estimated Aggregate Amortization Expense for Lease Intangibles (Detail) $ in Thousands |
Sep. 30, 2020
USD ($)
|
|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| 2020 | $ 4,702 |
| 2021 | 15,890 |
| 2022 | 8,229 |
| 2023 | 5,355 |
| 2024 | 3,077 |
| Thereafter | 7,815 |
| Total | $ 45,068 |
Debt - Schedule of Principal Repayments of Mortgage Payable (Detail) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| 2020 | $ 1,571 | |
| 2021 | 89,356 | |
| 2022 | 81,529 | |
| 2023 | 48,529 | |
| 2024 | 124,725 | |
| Thereafter | 336,875 | |
| Total | $ 682,585 | $ 612,292 |
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Administrative Services Agreement [Member] | Second City Funds [Member] | ||
| Related Party Transaction [Line Items] | ||
| Annual payment receivable for services | $ 0.3 | $ 0.4 |
| Administrative Services Agreement [Member] | Clarity Real Estate III GP Limited [Member] | ||
| Related Party Transaction [Line Items] | ||
| Annual payment receivable for services | $ 0.2 | |
| Purchase Contracts [Member] | Rental and other revenues [Member] | ||
| Related Party Transaction [Line Items] | ||
| Annual payment receivable for services | $ 2.6 | |
Leases - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Lease cost | $ 0.2 | $ 0.2 | $ 0.6 | $ 0.6 |
| Operating Lease, Weighted Average Remaining Lease Term | 56 years | 56 years | ||
| Operating Lease, Weighted Average Discount Rate, Percent | 6.30% | 6.30% | ||
| Maximum [Member] | ||||
| Remaining lease terms | 68 years | 68 years | ||
| Minimum [Member] | ||||
| Remaining lease terms | 1 year | 1 year | ||
Leases - Schedule of Operating Leases (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Fixed payments | $ 35,071 | $ 33,495 | $ 103,070 | $ 98,555 |
| Variable payments | 6,151 | 5,441 | 17,864 | 15,967 |
| Operating Lease, Lease Income | $ 41,222 | $ 38,936 | $ 120,934 | $ 114,522 |
Leases - Schedule of Operating Leases (Paranthetical) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
| Operating Lease, Lease Income | $ 41,222 | $ 38,936 | $ 120,934 | $ 114,522 |
Leases - Schedule of Future Minimum Lease Payments under Non-cancellable Operating Leases (Detail) $ in Thousands |
Sep. 30, 2020
USD ($)
|
|---|---|
| Leases [Abstract] | |
| 2020 | $ 30,755 |
| 2021 | 122,511 |
| 2022 | 104,734 |
| 2023 | 86,989 |
| 2024 | 67,752 |
| Thereafter | 175,205 |
| Total future minimum lease payments to be received | $ 587,946 |
Leases - Schedule of Operating Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Lease liability – operating leases | $ 7,908 | |
| Lease liability – financing leases | 61 | |
| Other Assets [Member] | ||
| Right-of-use asset - operating leases | 12,838 | $ 13,130 |
| Right-of-use asset – financing leases | 61 | 79 |
| Other Liabilities [Member] | ||
| Lease liability – operating leases | 7,908 | 8,033 |
| Lease liability – financing leases | $ 61 | $ 79 |
Leases - Schedule Future Minimum Lease Payments To Be Paid (Detail) $ in Thousands |
Sep. 30, 2020
USD ($)
|
|---|---|
| 2020 | $ 45 |
| 2021 | 817 |
| 2022 | 798 |
| 2023 | 663 |
| 2024 | 597 |
| Thereafter | 26,680 |
| Total future minimum lease payments | 29,600 |
| Discount | (21,692) |
| Total | 7,908 |
| 2020 | 7 |
| 2021 | 27 |
| 2022 | 27 |
| 2023 | 4 |
| 2024 | 0 |
| Thereafter | 0 |
| Total future minimum lease payments | 65 |
| Discount | (4) |
| Total | $ 61 |
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