ý | 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 |
Maryland | 46-4654479 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | x | Smaller reporting company | ¨ | |||
Emerging growth company | x |
Page No. | ||
Item 1. | Financial Statements: | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 33,786 | $ | 33,164 | |||
Restricted cash | 14,642 | 12,886 | |||||
Real estate: | |||||||
Land | 122,482 | 122,482 | |||||
Building and improvements | 819,079 | 815,721 | |||||
Tenant origination and absorption cost | 240,364 | 240,364 | |||||
Construction in progress | 132 | 299 | |||||
Total real estate | 1,182,057 | 1,178,866 | |||||
Less: accumulated depreciation and amortization | (117,288 | ) | (83,905 | ) | |||
Total real estate, net | 1,064,769 | 1,094,961 | |||||
Intangible assets, net | 3,016 | 3,294 | |||||
Due from affiliates | 1,128 | 686 | |||||
Deferred rent | 29,851 | 22,733 | |||||
Other assets, net | 6,862 | 12,224 | |||||
Total assets | $ | 1,154,054 | $ | 1,179,948 | |||
LIABILITIES AND EQUITY | |||||||
Total debt | $ | 481,573 | $ | 481,848 | |||
Restricted reserves | 13,310 | 13,368 | |||||
Distributions payable | 1,772 | 1,689 | |||||
Due to affiliates | 18,988 | 16,896 | |||||
Below market leases, net | 47,506 | 51,295 | |||||
Accrued expenses and other liabilities | 21,765 | 19,903 | |||||
Total liabilities | 584,914 | 584,999 | |||||
Commitments and contingencies (Note 11) | |||||||
Common stock subject to redemption | 37,401 | 32,405 | |||||
Stockholders' equity: | |||||||
Common Stock, $0.001 par value - Authorized:800,000,000; 77,760,266 and 77,175,283 shares outstanding in the aggregate, as of September 30, 2018 and December 31, 2017, respectively (1) | 77 | 76 | |||||
Additional paid-in capital | 657,756 | 656,705 | |||||
Cumulative distributions | (114,510 | ) | (82,590 | ) | |||
Accumulated deficit | (13,102 | ) | (12,672 | ) | |||
Accumulated other comprehensive income | 310 | 949 | |||||
Total stockholders' equity | 530,531 | 562,468 | |||||
Noncontrolling interests | 1,208 | 76 | |||||
Total equity | 531,739 | 562,544 | |||||
Total liabilities and equity | $ | 1,154,054 | $ | 1,179,948 |
(1) | See Note 8, Equity, for the number of shares outstanding of each class of common stock as of September 30, 2018 and December 31, 2017. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue: | |||||||||||||||
Rental income | $ | 21,928 | $ | 22,926 | $ | 65,854 | $ | 67,211 | |||||||
Property expense recovery | 4,785 | 4,423 | 13,945 | 12,671 | |||||||||||
Total revenue | 26,713 | 27,349 | 79,799 | 79,882 | |||||||||||
Expenses: | |||||||||||||||
Property operating | 1,866 | 1,787 | 5,598 | 4,886 | |||||||||||
Property tax | 2,449 | 2,511 | 7,521 | 7,244 | |||||||||||
Property management fees to affiliates | 456 | 452 | 1,365 | 1,347 | |||||||||||
Asset management fees to affiliates | — | 2,485 | — | 8,026 | |||||||||||
Advisory fees to affiliates | 2,346 | 273 | 6,970 | 273 | |||||||||||
Performance distribution allocation to affiliates | 2,084 | 213 | 6,200 | 213 | |||||||||||
General and administrative | 775 | 831 | 2,446 | 2,736 | |||||||||||
Corporate operating expenses to affiliates | 806 | 566 | 2,168 | 1,679 | |||||||||||
Depreciation and amortization | 11,252 | 11,236 | 33,383 | 32,710 | |||||||||||
Total expenses | 22,034 | 20,354 | 65,651 | 59,114 | |||||||||||
Income before other income (expenses) | 4,679 | 6,995 | 14,148 | 20,768 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense | (5,464 | ) | (3,997 | ) | (14,775 | ) | (11,445 | ) | |||||||
Other income, net | 28 | 101 | 196 | 265 | |||||||||||
Net (loss) income | (757 | ) | 3,099 | (431 | ) | 9,588 | |||||||||
Net loss (income) attributable to noncontrolling interests | 1 | (1 | ) | 1 | (3 | ) | |||||||||
Net (loss) income attributable to common stockholders | $ | (756 | ) | $ | 3,098 | $ | (430 | ) | $ | 9,585 | |||||
Net (loss) income attributable to common stockholders per share, basic and diluted | $ | (0.01 | ) | $ | 0.04 | $ | (0.01 | ) | $ | 0.13 | |||||
Weighted average number of common shares outstanding, basic and diluted | 78,034,852 | 76,157,963 | 77,594,234 | 75,441,620 | |||||||||||
Distributions declared per common share | $ | 0.14 | $ | 0.14 | $ | 0.42 | $ | 0.42 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net (loss) income | $ | (757 | ) | $ | 3,099 | $ | (431 | ) | $ | 9,588 | |||||
Other comprehensive (loss) income: | |||||||||||||||
Change in fair value of swap agreement | (348 | ) | (87 | ) | (641 | ) | (17 | ) | |||||||
Total comprehensive (loss) income | (1,105 | ) | 3,012 | (1,072 | ) | 9,571 | |||||||||
Comprehensive loss (income) attributable to noncontrolling interests | 2 | (1 | ) | 3 | (3 | ) | |||||||||
Comprehensive (loss) income attributable to common stockholders | $ | (1,103 | ) | $ | 3,011 | $ | (1,069 | ) | $ | 9,568 |
Common Stock | Additional Paid-In Capital | Cumulative Distributions | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | Non- controlling Interests | Total Equity | |||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||||
Balance December 31, 2016 | 70,939,647 | $ | 71 | $ | 615,653 | $ | (38,406 | ) | $ | (23,788 | ) | $ | 841 | $ | 554,371 | $ | 84 | $ | 554,455 | |||||||||||||||
Gross proceeds from issuance of common stock | 4,205,673 | 4 | 41,822 | — | — | — | 41,826 | — | 41,826 | |||||||||||||||||||||||||
Discount on issuance of common stock | — | — | (16 | ) | — | — | — | (16 | ) | — | (16 | ) | ||||||||||||||||||||||
Stock-based compensation | 25,500 | — | 292 | — | — | — | 292 | — | 292 | |||||||||||||||||||||||||
Offering costs including dealer manager fees and stockholder servicing fees to affiliates | — | — | (3,593 | ) | — | — | — | (3,593 | ) | — | (3,593 | ) | ||||||||||||||||||||||
Distributions to common stockholders | — | — | — | (19,427 | ) | — | — | (19,427 | ) | — | (19,427 | ) | ||||||||||||||||||||||
Issuance of shares for distribution reinvestment plan | 2,358,188 | 2 | 22,206 | (22,208 | ) | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase of common stock | (623,499 | ) | (1 | ) | (5,741 | ) | — | — | — | (5,742 | ) | — | (5,742 | ) | ||||||||||||||||||||
Additions to common stock subject to redemption | — | — | (16,467 | ) | — | — | — | (16,467 | ) | — | (16,467 | ) | ||||||||||||||||||||||
Issuance of stock dividends | 269,774 | — | 2,549 | (2,549 | ) | — | — | — | — | — | ||||||||||||||||||||||||
Distributions to noncontrolling interest | — | — | — | — | — | — | — | (11 | ) | (11 | ) | |||||||||||||||||||||||
Net income | — | — | — | — | 11,116 | — | 11,116 | 3 | 11,119 | |||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 108 | 108 | — | 108 | |||||||||||||||||||||||||
Balance December 31, 2017 | 77,175,283 | $ | 76 | $ | 656,705 | $ | (82,590 | ) | $ | (12,672 | ) | $ | 949 | $ | 562,468 | $ | 76 | $ | 562,544 | |||||||||||||||
Gross proceeds from issuance of common stock | 762,537 | 1 | 7,429 | — | — | — | 7,430 | — | 7,430 | |||||||||||||||||||||||||
Changes in redeemable common stock | — | — | (5,292 | ) | — | — | — | (5,292 | ) | — | (5,292 | ) | ||||||||||||||||||||||
Discount on issuance of common stock | — | — | (1 | ) | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||||
Stock-based compensation | 10,500 | — | 44 | — | — | — | 44 | — | 44 | |||||||||||||||||||||||||
Offering costs including dealer manager fees and stockholder servicing fees to affiliates | — | — | (1,129 | ) | — | — | — | (1,129 | ) | — | (1,129 | ) | ||||||||||||||||||||||
Distributions to common stockholders | — | — | — | (15,498 | ) | — | — | (15,498 | ) | — | (15,498 | ) | ||||||||||||||||||||||
Issuance of shares for distribution reinvestment plan | 1,712,265 | 2 | 16,420 | (16,422 | ) | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase of common stock | (2,000,321 | ) | (2 | ) | (18,898 | ) | — | — | — | (18,900 | ) | — | (18,900 | ) | ||||||||||||||||||||
Additions to common stock subject to redemption | — | — | 2,478 | — | — | — | 2,478 | — | 2,478 | |||||||||||||||||||||||||
Issuance of stock dividends | 2 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Issuance of limited partnership units | — | — | — | — | — | — | — | 1,185 | 1,185 | |||||||||||||||||||||||||
Distributions to noncontrolling interest | — | — | — | — | — | — | — | (50 | ) | (50 | ) | |||||||||||||||||||||||
Net (loss) | — | — | — | — | (430 | ) | — | (430 | ) | (1 | ) | (431 | ) | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | (639 | ) | (639 | ) | (2 | ) | (641 | ) | |||||||||||||||||||||
Balance September 30, 2018 | 77,660,266 | $ | 77 | $ | 657,756 | $ | (114,510 | ) | $ | (13,102 | ) | $ | 310 | $ | 530,531 | $ | 1,208 | $ | 531,739 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Operating Activities: | |||||||
Net (loss) income | $ | (431 | ) | $ | 9,588 | ||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation of building and improvements | 15,284 | 15,053 | |||||
Amortization of tenant origination and absorption costs | 18,099 | 17,657 | |||||
Amortization of above and below market leases | (3,511 | ) | (3,389 | ) | |||
Amortization of deferred financing costs | 981 | 826 | |||||
Deferred rent | (7,118 | ) | (13,227 | ) | |||
Stock based compensation | 44 | 267 | |||||
Unrealized loss on interest rate swap | 77 | 60 | |||||
Performance distribution allocation (non-cash) | 3,607 | — | |||||
Change in operating assets and liabilities: | |||||||
Other assets, net | 1,714 | 3,730 | |||||
Accrued expenses and other liabilities, net | 4,197 | (629 | ) | ||||
Due to affiliates, net | 1,749 | 1,345 | |||||
Net cash provided by operating activities | 34,692 | 31,281 | |||||
Investing Activities: | |||||||
Acquisition of properties, net | — | (44,234 | ) | ||||
Restricted reserves | (58 | ) | (20,251 | ) | |||
Payments for construction in progress | (440 | ) | (407 | ) | |||
Real estate acquisition deposits | — | 250 | |||||
Net cash used in investing activities | (498 | ) | (64,642 | ) | |||
Financing Activities: | |||||||
Proceeds from borrowings - Credit Facility | — | 14,300 | |||||
Proceeds from borrowings - BofA/KeyBank Loan | 250,000 | — | |||||
Proceeds from borrowings - Term Loan | 113,000 | — | |||||
Principal payoff of indebtedness - Credit Facility | (357,673 | ) | — | ||||
Deferred financing costs | (6,583 | ) | (30 | ) | |||
Issuance of common stock | 7,465 | 38,923 | |||||
Offering costs | (3,660 | ) | (6,695 | ) | |||
Repurchase of common stock | (18,900 | ) | (3,798 | ) | |||
Distributions paid to common stockholders | (15,420 | ) | (14,318 | ) | |||
Distributions paid to noncontrolling interests | (45 | ) | (8 | ) | |||
Net cash (used in) provided by financing activities | (31,816 | ) | 28,374 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,378 | (4,987 | ) | ||||
Cash, cash equivalents and restricted cash at the beginning of the period | 46,050 | 63,561 | |||||
Cash, cash equivalents and restricted cash at the end of the period | $ | 48,428 | $ | 58,574 | |||
Supplemental Disclosures of Significant Non-Cash Transactions: | |||||||
Reclassification from escrow account receivables to building and improvements | $ | 2,905 | $ | — | |||
Decrease in fair value swap agreement | $ | (641 | ) | $ | (17 | ) | |
Increase in Stockholder Servicing Fee Payable | $ | 174 | $ | 564 | |||
Increase in distribution payable to common stockholders | $ | 77 | $ | 118 | |||
Common stock issued pursuant to the distribution reinvestment plan | $ | 16,422 | $ | 16,546 |
As of September 30, 2018 | |||
Remaining 2018 | $ | 19,311 | |
2019 | 78,887 | ||
2020 | 80,492 | ||
2021 | 72,677 | ||
2022 | 73,538 | ||
Thereafter | 528,803 | ||
Total | $ | 853,708 |
September 30, 2018 | December 31, 2017 | ||||||
In-place lease valuation (above market) | $ | 4,046 | $ | 4,046 | |||
In-place lease valuation (above market), accumulated amortization | (1,030 | ) | (752 | ) | |||
Intangible assets, net | $ | 3,016 | $ | 3,294 | |||
In-place lease valuation (below market) | $ | (62,070 | ) | $ | (62,070 | ) | |
In-place lease valuation (below market) - accumulated amortization | 14,564 | 10,775 | |||||
In-place lease valuation (below market), net | $ | (47,506 | ) | $ | (51,295 | ) | |
Tenant origination and absorption cost | $ | 240,364 | $ | 240,364 | |||
Tenant origination and absorption cost - accumulated amortization | (65,264 | ) | (47,165 | ) | |||
Tenant origination and absorption cost, net | $ | 175,100 | $ | 193,199 |
Year | In-Place Lease Valuation | Tenant Origination and Absorption Costs | ||||||
Remaining 2018 | $ | (1,170 | ) | $ | 6,033 | |||
2019 | $ | (4,695 | ) | $ | 24,198 | |||
2020 | $ | (4,695 | ) | $ | 24,198 | |||
2021 | $ | (3,799 | ) | $ | 19,715 | |||
2022 | $ | (3,799 | ) | $ | 19,597 |
September 30, 2018 | December 31, 2017 | Contractual Interest Rate (1) | Payment Type | Loan Maturity | Effective Interest Rate (2) | ||||||||||
BofA/KeyBank Loan | $ | 250,000 | $ | — | 4.32% | Interest Only | May 2028 | 4.36% | |||||||
AIG Loan | 126,970 | 126,970 | 4.15% | Interest Only (3) | November 2025 | 4.22% | |||||||||
Total Mortgage Debt | 376,970 | 126,970 | |||||||||||||
Term Loan | 113,000 | — | LIBOR + 1.25% (4) | Interest Only | June 2023 | 3.58% | |||||||||
Revolving Credit Facility | 85 | 357,758 | LIBOR + 1.30%(4)(5) | Interest Only | June 2023 (6) | 3.65% | |||||||||
Total Debt | 490,055 | 484,728 | |||||||||||||
Unamortized deferred financing costs | (8,482 | ) | (2,880 | ) | |||||||||||
Total Debt, net | $ | 481,573 | $ | 481,848 |
(1) | Including the effect of one interest rate swap agreement with a total notional amount of $100.0 million, the weighted average interest rate as of September 30, 2018 was approximately 3.81% for the Company's fixed-rate and variable-rate debt combined. |
(2) | Includes the effect of amortization of deferred financing costs. |
(3) | The AIG Loan (as defined below) requires monthly payments of interest only, at a fixed rate, for the first five years and fixed monthly payments of principal and interest thereafter. |
(4) | The LIBOR as of September 30, 2018 was 2.11%. |
(5) | As discussed below, the Company entered into an amended and restated credit agreement in June 2018. The contractual interest rate on the original revolving credit facility was LIBOR + 1.50% as of March 31, 2018. |
(6) | The Revolving Credit Facility (as defined below) has an initial term of four years, maturing on June 28, 2022, and may be extended for a one-year period if certain conditions are met and upon payment of an extension fee. See discussion below. |
Fair Value (1) | ||||||||||||||
Derivative Instruments | Effective Date | Maturity Date/ Termination | Interest Strike Rate | September 30, 2018 | December 31, 2017 | |||||||||
Assets | ||||||||||||||
Interest Rate Swap | 4/1/2016 | 12/12/2018 | 0.74% | $ | 310 | $ | 967 | |||||||
Interest Rate Swap (terminated on April 30, 2018) | 11/1/2017 | 4/30/2018 | 1.50% | — | 65 | |||||||||
$ | 310 | $ | 1,032 |
(1) | The Company records all derivative instruments on a gross basis on the consolidated balance sheets, and accordingly, there are no offsetting amounts that net assets against liabilities. As of September 30, 2018, the Company's derivative was in an asset position, and as such, the fair value is included in the line item "Other Assets, net" on the consolidated balance sheet. |
Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
Interest Rate Swaps in Cash Flow Hedging Relationship: | ||||||||
Amount of (gain) recognized in AOCI on derivatives | $ | (281 | ) | $ | (190 | ) | ||
Amount of gain reclassified from AOCI into earnings under “Interest expense” | $ | 922 | $ | 207 | ||||
Total interest expense presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded | $ | 14,775 | $ | 11,445 |
Total Fair Value | Quoted Prices in Active Markets for Identical Assets and Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||
Interest Rate Swaps at: | ||||||||||||
September 30, 2018 | $ | 310 | $ | — | $ | 310 | $ | — | ||||
December 31, 2017 | $ | 1,032 | $ | — | $ | 1,032 | $ | — |
September 30, 2018 | December 31, 2017 | ||||||||||||||
Fair Value | Carrying Value (1) | Fair Value | Carrying Value (1) | ||||||||||||
AIG Loan | $ | 119,338 | $ | 126,970 | $ | 122,928 | $ | 126,970 |
(1) | The carrying value of the AIG Loan does not include deferred financing costs as of September 30, 2018 and December 31, 2017. See Note 4, Debt, for details. |
September 30, 2018 | December 31, 2017 | |||||||
Prepaid rent | $ | 4,866 | $ | 4,304 | ||||
Leasing commission payable | 1,900 | 3,783 | ||||||
Accrued property taxes | 3,633 | 3,490 | ||||||
Interest expense payable | 2,661 | 3,013 | ||||||
Redemptions payable | 6,671 | 2,181 | ||||||
Other liabilities | 2,034 | 3,132 | ||||||
Total | $ | 21,765 | $ | 19,903 |
Class T | Class S | Class D | Class I | Class A | Class AA | Class AAA | Total | |||||||||||||||||||||||||
Gross proceeds from primary portion of offerings | $ | 2,245 | $ | 3 | $ | 182 | $ | 7,538 | $ | 240,780 | $ | 474,858 | $ | 8,381 | $ | 733,987 | ||||||||||||||||
Gross proceeds from DRP | $ | 16 | $ | — | $ | 2 | $ | 158 | $ | 25,328 | $ | 32,369 | $ | 503 | $ | 58,376 | ||||||||||||||||
Shares issued in primary portion of offerings | 224,647 | 264 | 18,921 | 786,573 | 24,199,764 | 47,562,870 | 901,225 | 73,694,264 | ||||||||||||||||||||||||
DRP shares issued | 1,650 | 13 | 236 | 16,496 | 2,669,097 | 3,412,273 | 53,014 | 6,152,779 | ||||||||||||||||||||||||
Stock distribution shares issued | — | — | — | — | 263,642 | 300,166 | 4,677 | 568,485 | ||||||||||||||||||||||||
Restricted stock issued | — | — | — | — | — | — | 36,000 | 36,000 | ||||||||||||||||||||||||
Total redemptions | — | — | — | — | (1,351,178 | ) | (1,434,491 | ) | (5,593 | ) | (2,791,262 | ) | ||||||||||||||||||||
Total shares outstanding as of September 30, 2018 | 226,297 | 277 | 19,157 | 803,069 | 25,781,325 | 49,840,818 | 989,323 | 77,660,266 | ||||||||||||||||||||||||
Total shares outstanding as of December 31, 2017 | 4,148 | 268 | 268 | 267,476 | 25,995,943 | 49,942,471 | 964,709 | 77,175,283 |
September 30, 2018 | |||
Cumulative offering costs | $ | 2,806 | |
Cumulative organizational costs | $ | 510 | |
Organizational and offering costs advanced by the Advisor | $ | 1,998 | |
Organizational and offering costs paid by the Company | 1,318 | ||
Adjustment to organizational and offering costs pursuant to the limitation: | |||
Costs in excess of limit | (1,820 | ) | |
Organizational and offering costs incurred | $ | 1,496 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Period | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Shares of common stock redeemed | 585,525 | (1) | 146,083 | 1,306,834 | 413,842 | |||||||||||
Weighted average price per share | $ | 9.65 | $ | 9.06 | $ | 9.36 | $ | 9.18 |
(1) | Second quarter requests redeemed in the third quarter. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
Period | 2018 | 2017 | 2018 | 2017 | ||||||||||
Shares of common stock redeemed | 693,487 | — | 693,487 | — | ||||||||||
Weighted average price per share | $ | 9.62 | — | $ | 9.62 | — |
Nine Months Ended September 30, 2018 | Year Ended December 31, 2017 | ||||||
Beginning balance | $ | 76 | $ | 84 | |||
Issuance of limited partnership units | 1,185 | — | |||||
Distributions to noncontrolling interests | (50 | ) | (11 | ) | |||
Net (loss) income allocation | (1 | ) | 3 | ||||
Other comprehensive loss | (2 | ) | — | ||||
Ending balance | $ | 1,208 | $ | 76 |
Incurred for the Nine Months Ended September 30, | Payable as of September 30, | Payable as of December 31, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Expensed | |||||||||||||||
Corporate operating expenses | $ | 2,168 | $ | 1,677 | $ | 806 | $ | 658 | |||||||
Asset management fees (1) | — | 8,027 | — | — | |||||||||||
Property management fees | 1,365 | 1,347 | 153 | 158 | |||||||||||
Performance distribution allocation | 6,200 | 213 | 6,224 | 2,394 | |||||||||||
Advisory fees | 6,970 | 273 | 784 | 762 | |||||||||||
Capitalized/Offering | |||||||||||||||
Acquisition fees and expenses (2) | — | 1,099 | — | — | |||||||||||
Organization and offering expense | 1,113 | 250 | 1,305 | (6) | 192 | ||||||||||
Other costs advanced by the Advisor | 938 | 604 | 319 | 285 | |||||||||||
Selling commissions (3) | 66 | 1,127 | — | — | |||||||||||
Dealer Manager fees | 11 | 393 | — | — | |||||||||||
Stockholder servicing fee (4) | 175 | 565 | 9,353 | 12,377 | |||||||||||
Advisor advances: (5) | |||||||||||||||
Organization and offering expenses | 45 | 136 | 44 | 8 | |||||||||||
Dealer Manager fees | — | 791 | — | 62 | |||||||||||
Total | $ | 19,051 | $ | 16,502 | $ | 18,988 | $ | 16,896 |
(1) | As part of the Follow-On Offering, the Company's new management compensation structure no longer includes asset management fees. |
(2) | Effective September 20, 2017, the Advisor is not entitled to acquisition fees, disposition fees or financing fees; provided, however, that the Advisor will receive the compensation set forth in the original advisory agreement for the Company’s investment in an approximately 1,000,000 square foot property located at 39000 Amrheim Road, Livonia, Michigan 48150 with a total transaction price of approximately $80.0 million. |
(3) | On September 18, 2017, the Company and the Dealer Manager entered into a dealer manager agreement for the Follow-On Offering. See the "Dealer Manager Agreement" section below for details regarding selling commissions and dealer manager fees. |
(4) | The Dealer Manager continues to receive a stockholder servicing fee with respect to Class AA shares as detailed in the Company's IPO prospectus. The stockholder servicing fee is paid quarterly and accrues daily in an amount equal to 1/365th of 1.0% of the NAV per share of the Class AA shares, up to an aggregate of 4% of the gross proceeds of Class AA shares sold. The Company will cease paying the stockholder servicing fee with respect to the Class AA shares at the earlier of (i) the date at which the aggregate underwriting compensation from all sources equals 10% of the gross proceeds from the sale of shares in Company's IPO (excluding proceeds from sales pursuant to the related DRP); (ii) the fourth anniversary of the last day of the fiscal quarter in which the Company's IPO terminated; (iii) the date that such Class AA share is redeemed or is no longer outstanding; and (iv) the occurrence of a merger, listing on a national securities exchange, or an extraordinary transaction. |
(5) | Pursuant to the original advisory agreement, commencing November 2, 2015, the Company remained obligated to reimburse the Advisor for organizational and offering costs incurred after such date. Terms of the organizational and offering costs are included in the Company's 2016 Annual Report on Form 10-K filed on March 15, 2017. |
(6) | Excludes amounts in excess of the 15% organization and offering costs limitation. See Note 8, Equity, for additional details. |
• | the investment objectives of each program; |
• | the amount of funds available to each program; |
• | the financial impact of the acquisition on each program, including each program’s earnings and distribution ratios; |
• | various strategic considerations that may impact the value of the investment to each program; |
• | the effect of the acquisition on concentration/diversification of each program’s investments; and |
• | the income tax effects of the purchase to each program. |
• | anticipated cash flow of the property to be acquired and the cash requirements of each program; |
• | effect of the acquisition on diversification of each program’s investments; |
• | policy of each program relating to leverage of properties; |
• | income tax effects of the purchase to each program; |
• | size of the investment; |
• | no significant increase in the cost of financing; and |
• | amount of funds available to each program and the length of time such funds have been available for investment. |
As of September 30, 2018 | As of June 30, 2018 | |||||||
Gross Real Estate Asset Value | $ | 1,225,400 | $ | 1,219,280 | ||||
Other Assets, net | 11,567 | 18,252 | ||||||
Mortgage Debt | (490,055 | ) | (490,055 | ) | ||||
NAV | $ | 746,912 | $ | 747,477 | ||||
Total Shares Outstanding | 77,620,432 | 77,783,486 | ||||||
NAV per share | $ | 9.62 | $ | 9.61 |
Range | Weighted Average | |||||
Overall Capitalization Rate (direct capitalization approach) | 5.25% | 6.75% | 5.47% | |||
Terminal Capitalization Rate (discounted cash flow approach) | 5.25% | 9.25% | 6.51% | |||
Cash Flow Discount Rate (discounted cash flow approach) | 6.00% | 11.50% | 7.28% |
Share Classes | ||||||||||||||||||||||||||||
Class T | Class S | Class D | Class I | IPO | OP Units | Total | ||||||||||||||||||||||
NAV as of June 30, 2018 | $ | 728,999 | $ | 2,632 | $ | 157,881 | $ | 3,893,132 | $ | 741,310,668 | $ | 1,383,852 | $ | 747,477,164 | ||||||||||||||
Fund level changes to NAV | ||||||||||||||||||||||||||||
Realized/unrealized gain on net assets | 29,277 | 46 | 3,070 | 117,303 | 12,738,169 | 23,786 | 12,911,651 | |||||||||||||||||||||
Dividend accrual | (20,264 | ) | (31 | ) | (2,457 | ) | (98,739 | ) | (10,689,429 | ) | (19,932 | ) | (10,830,852 | ) | ||||||||||||||
Class specific changes to NAV | ||||||||||||||||||||||||||||
Stockholder servicing fees/distribution fees | (4,450 | ) | (6 | ) | (113 | ) | — | (1,070,236 | ) | (1,999 | ) | (1,076,804 | ) | |||||||||||||||
NAV as of September 30, 2018 before share/unit sale/redemption activity | $ | 733,562 | $ | 2,641 | $ | 158,381 | $ | 3,911,696 | $ | 742,289,172 | $ | 1,385,707 | $ | 748,481,159 | ||||||||||||||
Unit sale/redemption activity- Dollars | ||||||||||||||||||||||||||||
Amount sold | 1,452,764 | 31 | 26,284 | 3,838,714 | 5,471,271 | — | 10,789,064 | |||||||||||||||||||||
Amount redeemed and to be paid | — | — | — | — | (12,358,277 | ) | (2) | — | (12,358,277 | ) | ||||||||||||||||||
NAV as of September 30, 2018 | $ | 2,186,326 | $ | 2,672 | $ | 184,665 | $ | 7,750,410 | $ | 735,402,166 | $ | 1,385,707 | $ | 746,911,946 | ||||||||||||||
Shares/units outstanding as of June 30, 2018 | 75,490 | 273 | 16,379 | 403,702 | 77,143,863 | 143,779 | 77,783,486 | |||||||||||||||||||||
Shares/units sold | 150,311 | 3 | 2,724 | 397,928 | 569,034 | — | 1,120,000 | |||||||||||||||||||||
Shares/units redeemed | — | — | — | — | (1,283,055 | ) | — | (1,283,055 | ) | |||||||||||||||||||
Shares/units outstanding as of September 30, 2018 (1) | 225,801 | 276 | 19,103 | 801,630 | 76,429,842 | 143,779 | 77,620,431 | |||||||||||||||||||||
NAV per share/unit as of June 30, 2018 | $ | 9.66 | $ | 9.65 | $ | 9.64 | $ | 9.64 | $ | 9.61 | ||||||||||||||||||
Change in NAV per share/unit | 0.02 | 0.03 | 0.03 | 0.03 | 0.01 | |||||||||||||||||||||||
NAV per share as of September 30, 2018 | $ | 9.68 | $ | 9.68 | $ | 9.67 | $ | 9.67 | $ | 9.62 |
(1) | Excludes DRP shares issued on October 1, 2018. |
(2) | Amount includes second quarter redemptions paid of $5,686,980 and third quarter 2018 redemptions paid on October 1, 2018 of $6,671,297. |
State | Net Rent (unaudited) | Number of Properties | Percentage of Net Rent | |||||||
Ohio | $ | 9,986 | 4 | 12.8 | % | |||||
Illinois | 8,810 | 2 | 11.3 | |||||||
California | 8,714 | 3 | 11.2 | |||||||
Alabama (1) | 8,477 | 1 | 10.9 | |||||||
New Jersey | 8,240 | 2 | 10.6 | |||||||
Arizona | 7,514 | 2 | 9.6 | |||||||
Nevada | 6,906 | 2 | 8.9 | |||||||
Texas | 4,150 | 1 | 5.3 | |||||||
Oregon | 3,291 | 1 | 4.2 | |||||||
North Carolina | 2,732 | 2 | 3.5 | |||||||
All Others (2) | 9,151 | 7 | 11.7 | |||||||
Total | $ | 77,971 | 27 | 100.0 | % |
(1) | Includes escrow proceeds of approximately $0.1 million to be received during the 12-month period subsequent to September 30, 2018. |
(2) | All others represent 3.5% or less of total net rent on an individual basis. |
Industry (1) | Net Rent (unaudited) | Number of Lessees | Percentage of Net Rent | |||||||
Consumer Services | $ | 12,967 | 4 | 16.6 | % | |||||
Utilities (2) | 10,413 | 2 | 13.4 | |||||||
Capital Goods | 10,385 | 6 | 13.3 | |||||||
Technology Hardware & Equipment | 9,752 | 3 | 12.5 | |||||||
Diversified Financials | 5,863 | 1 | 7.5 | |||||||
Retailing | 5,731 | 1 | 7.4 | |||||||
Banks | 5,603 | 2 | 7.2 | |||||||
Energy | 4,150 | 1 | 5.3 | |||||||
Consumer Durables and Apparel | 3,291 | 1 | 4.2 | |||||||
Transportation | 3,161 | 2 | 4.1 | |||||||
Pharmaceuticals, Biotechnology & Life Sciences | 2,867 | 1 | 3.7 | |||||||
All Others (3) | 3,788 | 3 | 4.8 | |||||||
Total | $ | 77,971 | 27 | 100.0 | % |
(1) | Industry classification based on the Global Industry Classification Standards. |
(2) | Includes escrow proceeds of approximately $0.1 million to be received during the 12-month period subsequent to September 30, 2018. |
(3) | All others represent 3.5% or less of total net rent on an individual basis. |
Tenant | Net Rent (unaudited) | Percentage of Net Rent | |||||
Southern Company Services, Inc. (1) | $ | 8,477 | 10.9 | % | |||
American Express Travel Related Services Company, Inc. | 5,863 | 7.5 | |||||
Amazon.com.dedc, LLC | 5,731 | 7.4 | |||||
Bank of America, N.A. | 5,604 | 7.2 | |||||
Wyndham Worldwide Operations | 5,373 | 6.9 | |||||
IGT | 4,754 | 6.1 | |||||
3M Company | 4,521 | 5.8 | |||||
Zebra Technologies Corporation | 4,289 | 5.5 | |||||
Wood Group Mustang, Inc. | 4,150 | 5.3 | |||||
Nike | 3,291 | 4.2 | |||||
Others (2) | 25,918 | 33.2 | |||||
Total | $ | 77,971 | 100.0 | % |
(1) | Includes escrow proceeds of approximately $0.1 million to be received during the 12-month period subsequent to September 30, 2018. |
(2) | All others account for 4% or less of total net rent on an individual basis. |
Year of Lease Expiration | Net Rent (unaudited) | Number of Lessees | Approx. Square Feet | Percentage of Net Rent | |||||||||
2021 | $ | 8,895 | 3 | 747,000 | 11.4 | % | |||||||
2022 | 1,198 | 1 | 312,000 | 1.5 | |||||||||
2023 | 6,908 | 2 | 658,600 | 8.9 | |||||||||
2024 | 8,952 | 4 | 571,500 | 11.5 | |||||||||
2025 | 7,509 | 5 | 728,700 | 9.6 | |||||||||
2026 and beyond (1) | 44,509 | 12 | 4,322,800 | 57.1 | |||||||||
Total | $ | 77,971 | 27 | 7,340,600 | 100.0 | % |
(1) | Includes escrow proceeds of approximately $0.1 million to be received during the 12-month period subsequent to September 30, 2018. |
Three Months Ended September 30, | Increase/(Decrease) | Percentage Change | ||||||||||||
2018 | 2017 | |||||||||||||
Rental income | $ | 21,928 | $ | 22,926 | $ | (998 | ) | (4 | )% | |||||
Property expense recoveries | 4,785 | 4,423 | 362 | 8 | % | |||||||||
Property operating expenses | 1,866 | 1,787 | 79 | 4 | % | |||||||||
Property tax expense | 2,449 | 2,511 | (62 | ) | (2 | )% | ||||||||
Depreciation and amortization | 11,252 | 11,236 | 16 | 0 | % |
Nine Months Ended September 30, | Increase/(Decrease) | Percentage Change | ||||||||||||
2018 | 2017 | |||||||||||||
Rental income | $ | 63,433 | $ | 65,628 | $ | (2,195 | ) | (3 | )% | |||||
Property expense recoveries | 13,363 | 12,252 | 1,111 | 9 | % | |||||||||
Property operating expenses | 5,491 | 4,872 | 619 | 13 | % | |||||||||
Property tax expense | 7,078 | 6,930 | 148 | 2 | % | |||||||||
Depreciation and amortization | 31,824 | 31,710 | 114 | 0 | % |
Three Months Ended September 30, | Increase/(Decrease) | Percentage Change | ||||||||||||
2018 | 2017 | |||||||||||||
Rental income | $ | 21,928 | $ | 22,926 | $ | (998 | ) | (4 | )% | |||||
Property expense recoveries | 4,785 | 4,423 | 362 | 8 | % | |||||||||
Property operating expense | 1,866 | 1,787 | 79 | 4 | % | |||||||||
Property tax expense | 2,449 | 2,511 | (62 | ) | (2 | )% | ||||||||
Property management fees to affiliates | 456 | 452 | 4 | 1 | % | |||||||||
Asset management fees to affiliates | — | 2,485 | (2,485 | ) | (100 | )% | ||||||||
Advisory fees to affiliates | 2,346 | 273 | 2,073 | 759 | % | |||||||||
Performance distribution allocation to affiliates | 2,084 | 213 | 1,871 | 878 | % | |||||||||
Corporate operating expenses to affiliates | 806 | 566 | 240 | 42 | % | |||||||||
General and administrative expenses | 775 | 831 | (56 | ) | (7 | )% | ||||||||
Depreciation and amortization | 11,252 | 11,236 | 16 | 0 | % | |||||||||
Interest expense | 5,464 | 3,997 | 1,467 | 37 | % | |||||||||
Other income, net | 28 | 101 | (73 | ) | (72 | )% |
Nine Months Ended September 30, | Increase/(Decrease) | Percentage Change | ||||||||||||
2018 | 2017 | |||||||||||||
Rental income | $ | 65,854 | $ | 67,211 | $ | (1,357 | ) | (2 | )% | |||||
Property expense recoveries | 13,945 | 12,671 | 1,274 | 10 | % | |||||||||
Property operating expense | 5,598 | 4,886 | 712 | 15 | % | |||||||||
Property tax expense | 7,521 | 7,244 | 277 | 4 | % | |||||||||
Asset management fees to affiliates | — | 8,026 | (8,026 | ) | (100 | )% | ||||||||
Property management fees to affiliates | 1,365 | 1,347 | 18 | 1 | % | |||||||||
Advisory fees to affiliates | 6,970 | 273 | 6,697 | 2,453 | % | |||||||||
Performance distribution allocation to affiliates | 6,200 | 213 | 5,987 | 2,811 | % | |||||||||
General and administrative expenses | 2,446 | 2,736 | (290 | ) | (11 | )% | ||||||||
Corporate operating expenses to affiliates | 2,168 | 1,679 | 489 | 29 | % | |||||||||
Depreciation and amortization | 33,383 | 32,710 | 673 | 2 | % | |||||||||
Interest expense | 14,775 | 11,445 | 3,330 | 29 | % | |||||||||
Other (expense) income, net | 196 | 265 | (69 | ) | (26 | )% |
• | Revenues in excess of cash received, net. Most of our leases provide for periodic minimum rent payment increases throughout the term of the lease. In accordance with GAAP, these contractual periodic minimum rent payment increases during the term of a lease are recorded to rental revenue on a straight-line basis in order to reconcile the difference between accrual and cash basis accounting. As straight-line rent is a GAAP non-cash adjustment and is included in historical earnings, FFO is adjusted for the effect of straight-line rent to arrive at AFFO as a means of determining |
• | Amortization of in-place lease valuation. Acquired in-place leases are valued as above-market or below-market as of the date of acquisition based on the present value of the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) management's estimate of fair market lease rates for the corresponding in-place leases over a period equal to the remaining non-cancelable term of the lease for above-market leases. The above-market and below-market lease values are capitalized as intangible lease assets or liabilities and amortized as an adjustment to rental income over the remaining terms of the respective leases. As amortization of in-place lease valuation is a non-cash adjustment and is included in historical earnings, FFO is adjusted for the effect of the amortization to arrive at AFFO as a means of determining operating results of our portfolio. |
• | Acquisition-related costs. We were organized primarily with the purpose of acquiring or investing in income-producing real property in order to generate operational income and cash flow that will allow us to provide regular cash distributions to our stockholders. In the process, we incur non-reimbursable affiliated and non-affiliated acquisition-related costs, which in accordance with GAAP are capitalized and included as part of the relative fair value when the property acquisition meets the definition of an asset acquisition or are expensed as incurred and are included in the determination of income (loss) from operations and net income (loss), for property acquisitions accounted for as a business combination. By excluding acquisition-related costs, AFFO may not provide an accurate indicator of our operating performance during periods in which acquisitions are made. However, it can provide an indication of our on-going ability to generate cash flow from operations and continue as a going concern after we cease to acquire properties on a frequent and regular basis, which can be compared to the AFFO of other non-listed REITs that have completed their acquisition activity and have similar operating characteristics to ours. Management believes that excluding these costs from AFFO provides investors with supplemental performance information that is consistent with the performance models and analyses used by management. |
• | Gain or loss from the extinguishment of debt. We use debt as a partial source of capital to acquire properties in our portfolio. As a term of obtaining this debt, we will pay financing costs to the respective lender. Financing costs are presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts and amortized into interest expense on a straight-line basis over the term of the debt. We consider the amortization expense to be a component of operations if the debt was used to acquire properties. From time to time, we may cancel certain debt obligations and replace these canceled debt obligations with new debt at more favorable terms to us. In doing so, we are required to write off the remaining capitalized financing costs associated with the canceled debt, which we consider to be a cost, or loss, on extinguishing such debt. Management believes that this loss is considered an event not associated with our operations, and therefore, deems this write off to be an exclusion from AFFO. |
• | Unrealized gains (losses) on derivative instruments. These adjustments include unrealized gains (losses) from mark-to-market adjustments on interest rate swaps and losses due to hedge ineffectiveness. The change in the fair value of interest rate swaps not designated as a hedge and the change in the fair value of the ineffective portion of interest rate swaps are non-cash adjustments recognized directly in earnings and are included in interest expense. We have excluded these adjustments in our calculation of AFFO to more appropriately reflect the economic impact of our interest rate swap agreements. |
• | Performance distribution allocation. Our Advisor holds a special limited partner interest in our Operating Partnership that entitles it to receive a special distribution from our Operating Partnership equal to 12.5% of the total return, subject to a 5.5% hurdle amount and a high water mark, with a catch-up. At the election of the advisor, the performance distribution allocation may be paid in cash or Class I units in our Operating Partnership. We believe that the distribution, to the extent it is paid in cash, is appropriately included as a component of corporate operating expenses to |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net (loss) income | $ | (757 | ) | $ | 3,099 | $ | (431 | ) | $ | 9,588 | |||||
Adjustments: | |||||||||||||||
Depreciation of building and improvements | 5,153 | 5,137 | 15,284 | 15,053 | |||||||||||
Amortization of leasing costs and intangibles | 6,099 | 6,099 | 18,099 | 17,657 | |||||||||||
FFO | $ | 10,495 | $ | 14,335 | $ | 32,952 | $ | 42,298 | |||||||
Distributions to noncontrolling interests | (20 | ) | (3 | ) | (51 | ) | (8 | ) | |||||||
FFO, net of noncontrolling interest distributions | $ | 10,475 | $ | 14,332 | $ | 32,901 | $ | 42,290 | |||||||
Reconciliation of FFO to AFFO | |||||||||||||||
FFO, net of noncontrolling interest distributions | $ | 10,475 | $ | 14,332 | $ | 32,901 | $ | 42,290 | |||||||
Adjustments: | |||||||||||||||
Revenues in excess of cash received, net | (1,412 | ) | (2,857 | ) | (4,544 | ) | (8,006 | ) | |||||||
Amortization of below market rent, net | (1,183 | ) | (1,183 | ) | (3,511 | ) | (3,389 | ) | |||||||
Unrealized loss (gain) on derivatives | — | 19 | 77 | 60 | |||||||||||
Performance distribution adjustment | 521 | — | 3,607 | — | |||||||||||
AFFO | $ | 8,401 | $ | 10,311 | $ | 28,530 | $ | 30,955 |
Class | ||||||||||||||||||||||||||||||||
T | S | D | I | A | AA | AAA | Total | |||||||||||||||||||||||||
Gross proceeds from primary portion of offerings | $ | 2,245 | $ | 3 | $ | 182 | $ | 7,538 | $ | 240,780 | $ | 474,858 | $ | 8,381 | $ | 733,987 | ||||||||||||||||
Gross proceeds from DRP | $ | 16 | $ | — | $ | 2 | $ | 158 | $ | 25,328 | $ | 32,369 | $ | 503 | $ | 58,376 | ||||||||||||||||
Shares issued in primary portion of offerings | 224,647 | 264 | 18,921 | 786,573 | 24,199,764 | 47,562,870 | 901,225 | 73,694,264 | ||||||||||||||||||||||||
DRP shares issued | 1,650 | 13 | 236 | 16,496 | 2,669,097 | 3,412,273 | 53,014 | 6,152,779 | ||||||||||||||||||||||||
Stock distribution shares issued | — | — | — | — | 263,642 | 300,166 | 4,677 | 568,485 | ||||||||||||||||||||||||
Restricted stock issued | — | — | — | — | — | — | 36,000 | 36,000 | ||||||||||||||||||||||||
Total shares issued prior to redemptions | 226,297 | 277 | 19,157 | 803,069 | 27,132,503 | 51,275,309 | 994,916 | 80,451,528 |
Fair value (1) | ||||||||||||||
Derivative Instrument | Effective Date | Maturity Date/ Termination | Interest Strike Rate | September 30, 2018 | December 31, 2017 | |||||||||
Assets | ||||||||||||||
Interest Rate Swap | 4/1/2016 | 12/12/2018 | 0.74% | $ | 310 | $ | 967 | |||||||
Interest Rate Swap (terminated on April 30, 2018) | 11/1/2017 | 4/30/2018 | 1.50% | — | 65 | |||||||||
Total | $ | 310 | $ | 1,032 |
(1) | We record all derivative instruments on a gross basis on the consolidated balance sheets, and accordingly, there are no offsetting amounts that net assets against liabilities. As of September 30, 2018, our derivative was in an asset position, and as such, the fair value is included in the line item "Other Assets, net" on the consolidated balance sheet. |
• | $44.2 million decrease in cash used to acquire properties for the nine months ended September 30, 2018 as a result of no acquisitions in 2018; and |
• | $20.2 million decrease in restricted reserves primarily as a result of payments of tenant improvement disbursements; offset by |
• | $0.3 million used in real estate acquisition deposits. |
• | $357.7 million increase in cash used for principal repayments of the Revolving Credit Facility in the current year provided by the proceeds of the BofA/KeyBank Loan and Term Loan borrowings in the current year; |
• | $16.2 million increase in cash used for payment for distributions and repurchases of common stock due to an increase in number of shareholders; |
• | $14.3 million decrease in cash provided from borrowings from the Revolving Credit Facility due to the acquisition of MISO on May 15, 2017; |
• | $6.6 million increase in cash used in deferred financing costs related to the BofA/KeyBank Loan in the current year; and |
• | $28.4 million decrease in cash provided by the issuance of common stock, net of discounts and offering costs due to the closing of the primary portion of our IPO during the first quarter of 2017; offset by |
• | $250.0 million increase in proceeds from borrowings on the BofA/KeyBank Loan. $249.8 million of the proceeds provided by the loan was used to pay down a portion of our Revolving Credit Facility; and |
• | $113.0 million increase in proceeds from borrowings on the Term Loan. $107.9 million of the proceeds provided by the loan was used to pay down a portion of our Revolving Credit Facility. |
• | the amount of time required for us to invest the funds received in our public offerings; |
• | our operating and interest expenses; |
• | the amount of distributions or dividends received by us from our indirect real estate investments, if applicable; |
• | our ability to keep our properties occupied; |
• | our ability to maintain or increase rental rates; |
• | tenant improvements, capital expenditures and reserves for such expenditures; |
• | the issuance of additional shares; and |
• | financings and refinancings. |
Nine Months Ended September 30, 2018 | Year Ended December 31, 2017 | |||||||||||
Distributions paid in cash — noncontrolling interests | $ | 45 | $ | 11 | ||||||||
Distributions paid in cash — common stockholders | 15,420 | 19,232 | ||||||||||
Distributions of DRP | 16,422 | 22,208 | ||||||||||
Total distributions | $ | 31,887 | (1) | $ | 41,451 | |||||||
Source of distributions (2) | ||||||||||||
Paid from cash flows provided by operations | $ | 15,465 | 48 | % | $ | 19,243 | 46 | % | ||||
Offering proceeds from issuance of common stock | — | 0 | % | — | 0 | % | ||||||
Offering proceeds from issuance of common stock pursuant to the DRP | 16,422 | 52 | % | 22,208 | 54 | % | ||||||
Total sources | $ | 31,887 | (3) | 100 | % | $ | 41,451 | 100 | % | |||
Net cash provided by operating activities | $ | 34,692 | $ | 39,712 |
(1) | Distributions are paid on a monthly basis in arrears. Distributions for all record dates of a given month are paid on or about the first business day of the following month. Total distributions declared but not paid as of September 30, 2018 were approximately $1.7 million for common stockholders and noncontrolling interests. |
(2) | Percentages were calculated by dividing the respective source amount by the total sources of distributions. |
(3) | Allocation of total sources are calculated on a quarterly basis. |
Payments Due During the Years Ending December 31, | |||||||||||||||||||
Total | 2018 | 2019-2020 | 2021-2022 | Thereafter | |||||||||||||||
Outstanding debt obligations (1) (2) | $ | 490,055 | $ | — | $ | — | $ | 4,449 | $ | 485,606 | |||||||||
Interest on outstanding debt obligations (3) | 162,932 | 5,016 | 40,494 | 40,299 | 77,123 | ||||||||||||||
Total | $ | 652,987 | $ | 5,016 | $ | 40,494 | $ | 44,748 | $ | 562,729 |
(1) | Amount relates to principal payments for the outstanding balance on the Unsecured Credit Facility, BofA/KeyBank Loan and AIG Loan at September 30, 2018. |
(2) | Deferred financing costs are excluded from total contractual obligations above. |
(3) | Projected interest payments are based on the outstanding principal amounts under the Unsecured Credit Facility, BofA/KeyBank Loan and AIG Loan at September 30, 2018. Projected interest payments are based on the interest rate in effect at September 30, 2018. |
For the Month Ended | Total Number of Shares Redeemed | Weighted Average Price Paid per Share | Total Number of Shares Redeemed as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||
July 31, 2018 | — | $ | — | — | (3) | |||||||
August 31, 2018 (1) | 585,525 | $ | 9.65 | 585,525 | (3) | |||||||
September 30, 2018 (2) | 693,487 | $ | 9.62 | 693,487 | (3) |
(1) | Shares redeemed in the month of August 2018 were pursuant to redemption requests under our IPO Share Redemption Program received during the quarter ended June 30, 2018. |
(2) | Shares redeemed in the month of September 2018 were pursuant to redemption requests under our New Share Redemption Program received during the quarter ended September 30, 2018. |
(3) | A description of the maximum number of shares that could be purchased under our New Share Redemption Program is included in the narrative preceding this table. |
(a) | During the quarter ended September 30, 2018, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K. |
(b) | During the quarter ended September 30, 2018, there were no material changes to the procedures by which security holders may recommend nominees to our board of directors. |
Exhibit No. | Description | |
101* | The following Griffin Capital Essential Asset REIT II, Inc. financial information for the period ended September 30, 2018 formatted in XBRL: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Comprehensive (Loss) Income (unaudited), (iv) Consolidated Statements of Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to Consolidated Financial Statements (unaudited). | |
* | Filed herewith. | |
** | Furnished herewith. |
GRIFFIN CAPITAL ESSENTIAL ASSET REIT II, INC. (Registrant) | ||||
Dated: | November 9, 2018 | By: | /s/ Javier F. Bitar | |
Javier F. Bitar | ||||
On behalf of the Registrant and as Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Griffin Capital Essential Asset REIT II, 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 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. |
Dated: | November 9, 2018 | By: | /s/ Kevin A. Shields |
Kevin A. Shields | |||
Chief Executive Officer and Chairman | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Griffin Capital Essential Asset REIT II, 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 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. |
Dated: | November 9, 2018 | By: | /s/ Javier F. Bitar |
Javier F. Bitar | |||
Chief Financial Officer and Treasurer | |||
(Principal Financial and Accounting Officer) |
(i) | the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 9, 2018 | By: | /s/ Kevin A. Shields |
Kevin A. Shields | |||
Chief Executive Officer and Chairman | |||
(Principal Executive Officer) |
(i) | the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
(ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | November 9, 2018 | By: | /s/ Javier F. Bitar |
Javier F. Bitar | |||
Chief Financial Officer and Treasurer | |||
(Principal Financial and Accounting Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Common stock, number of shares outstanding (in shares) | 77,660,266 | 77,175,283 |
Common Stock | ||
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, number of shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, number of shares outstanding (in shares) | 77,760,266 | 77,175,283 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenue: | ||||
Rental income | $ 21,928 | $ 22,926 | $ 65,854 | $ 67,211 |
Property expense recovery | 4,785 | 4,423 | 13,945 | 12,671 |
Total revenue | 26,713 | 27,349 | 79,799 | 79,882 |
Expenses: | ||||
Property operating | 1,866 | 1,787 | 5,598 | 4,886 |
Property tax | 2,449 | 2,511 | 7,521 | 7,244 |
Property management fees to affiliates | 456 | 452 | 1,365 | 1,347 |
Asset management fees to affiliates | 0 | 2,485 | 0 | 8,026 |
Advisory fees to affiliates | 2,346 | 273 | 6,970 | 273 |
Performance distribution allocation to affiliates | 2,084 | 213 | 6,200 | 213 |
General and administrative | 775 | 831 | 2,446 | 2,736 |
Corporate operating expenses to affiliates | 806 | 566 | 2,168 | 1,679 |
Depreciation and amortization | 11,252 | 11,236 | 33,383 | 32,710 |
Total expenses | 22,034 | 20,354 | 65,651 | 59,114 |
Income before other income (expenses) | 4,679 | 6,995 | 14,148 | 20,768 |
Other income (expense): | ||||
Interest expense | (5,464) | (3,997) | (14,775) | (11,445) |
Other income, net | 28 | 101 | 196 | 265 |
Net (loss) income | (757) | 3,099 | (431) | 9,588 |
Net loss (income) attributable to noncontrolling interests | 1 | (1) | 1 | (3) |
Net (loss) income attributable to common stockholders | $ (756) | $ 3,098 | $ (430) | $ 9,585 |
Net (loss) income attributable to common stockholders, basic and diluted (usd per share) | $ (0.01) | $ 0.04 | $ (0.01) | $ 0.13 |
Weighted average number of common shares outstanding, basic and diluted (shares) | 78,034,852 | 76,157,963 | 77,594,234 | 75,441,620 |
Dividends declared per common share (usd per share) | $ 0.14 | $ 0.14 | $ 0.42 | $ 0.42 |
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (757) | $ 3,099 | $ (431) | $ 9,588 |
Other comprehensive (loss) income: | ||||
Change in fair value of swap agreement | (348) | (87) | (641) | (17) |
Total comprehensive (loss) income | (1,105) | 3,012 | (1,072) | 9,571 |
Comprehensive loss (income) attributable to noncontrolling interests | 2 | (1) | 3 | (3) |
Comprehensive (loss) income attributable to common stockholders | $ (1,103) | $ 3,011 | $ (1,069) | $ 9,568 |
Consolidated Statements of Equity - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-In Capital |
Cumulative Distributions |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Stockholders’ Equity |
Non- controlling Interests |
---|---|---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2016 | $ 554,455 | $ 71 | $ 615,653 | $ (38,406) | $ (23,788) | $ 841 | $ 554,371 | $ 84 |
Beginning balance (shares) at Dec. 31, 2016 | 70,939,647 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Gross proceeds from issuance of common stock | 41,826 | $ 4 | 41,822 | 41,826 | ||||
Gross proceeds from issuance of common stock (shares) | 4,205,673 | |||||||
Discount on issuance of common stock | (16) | (16) | (16) | |||||
Stock-based compensation | 292 | 292 | 292 | |||||
Stock-based compensation (in shares) | 25,500 | |||||||
Offering costs including dealer manager fees and stockholder servicing fees to affiliates | (3,593) | (3,593) | (3,593) | |||||
Distributions to common stockholders | (19,427) | (19,427) | (19,427) | |||||
Issuance of shares for distribution reinvestment plan | $ 2 | 22,206 | (22,208) | |||||
Issuance of shares for distribution reinvestment plan (shares) | 2,358,188 | |||||||
Repurchase of common stock | (5,742) | $ (1) | (5,741) | (5,742) | ||||
Repurchase of common stock (in shares) | (623,499) | |||||||
Additions to common stock subject to redemption | (16,467) | (16,467) | (16,467) | |||||
Issuance of stock dividends | 0 | $ 0 | 2,549 | (2,549) | ||||
Issuance of stock dividends (in shares) | 269,774 | |||||||
Operating partnership units issued | 0 | |||||||
Distributions to noncontrolling interest | (11) | (11) | ||||||
Net (loss) | 11,119 | 11,116 | 11,116 | 3 | ||||
Other comprehensive loss | 108 | 108 | 108 | |||||
Ending balance at Dec. 31, 2017 | $ 562,544 | $ 76 | 656,705 | (82,590) | (12,672) | 949 | 562,468 | 76 |
Ending balance (shares) at Dec. 31, 2017 | 77,175,283 | 77,175,283 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Gross proceeds from issuance of common stock | $ 7,430 | $ 1 | 7,429 | 7,430 | ||||
Changes in redeemable common stock | (5,292) | (5,292) | (5,292) | |||||
Gross proceeds from issuance of common stock (shares) | 762,537 | |||||||
Discount on issuance of common stock | (1) | (1) | (1) | |||||
Stock-based compensation | 44 | 44 | 44 | |||||
Stock-based compensation (in shares) | 10,500 | |||||||
Offering costs including dealer manager fees and stockholder servicing fees to affiliates | (1,129) | (1,129) | (1,129) | |||||
Distributions to common stockholders | (15,498) | (15,498) | (15,498) | |||||
Issuance of shares for distribution reinvestment plan | 16,422 | $ 2 | 16,420 | (16,422) | ||||
Issuance of shares for distribution reinvestment plan (shares) | 1,712,265 | |||||||
Repurchase of common stock | (18,900) | $ (2) | (18,898) | (18,900) | ||||
Repurchase of common stock (in shares) | (2,000,321) | |||||||
Additions to common stock subject to redemption | 2,478 | 2,478 | 2,478 | |||||
Issuance of stock dividends (in shares) | 2 | |||||||
Operating partnership units issued | 1,185 | 1,185 | ||||||
Distributions to noncontrolling interest | (50) | (50) | ||||||
Net (loss) | (431) | (430) | (430) | (1) | ||||
Other comprehensive loss | (641) | (639) | (639) | (2) | ||||
Ending balance at Sep. 30, 2018 | $ 531,739 | $ 77 | $ 657,756 | $ (114,510) | $ (13,102) | $ 310 | $ 530,531 | $ 1,208 |
Ending balance (shares) at Sep. 30, 2018 | 77,660,266 | 77,660,266 |
Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Operating Activities: | |||||
Net (loss) income | $ (757) | $ 3,099 | $ (431) | $ 9,588 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||
Depreciation of building and improvements | 15,284 | 15,053 | |||
Amortization of tenant origination and absorption costs | 18,099 | 17,657 | |||
Amortization of above and below market leases | (3,511) | (3,389) | |||
Amortization of deferred financing costs | 981 | 826 | |||
Deferred rent | (7,118) | (13,227) | |||
Stock based compensation | 44 | 267 | |||
Unrealized loss on interest rate swap | 77 | 60 | |||
Performance distribution allocation (non-cash) | 3,607 | 0 | |||
Change in operating assets and liabilities: | |||||
Other assets, net | 1,714 | 3,730 | |||
Accrued expenses and other liabilities, net | 4,197 | (629) | |||
Due to affiliates, net | 1,749 | 1,345 | |||
Net cash provided by operating activities | 34,692 | 31,281 | |||
Investing Activities: | |||||
Acquisition of properties, net | 0 | (44,234) | |||
Restricted reserves | (58) | (20,251) | |||
Payments for construction in progress | (440) | (407) | |||
Real estate acquisition deposits | 0 | 250 | |||
Net cash used in investing activities | (498) | (64,642) | |||
Financing Activities: | |||||
Proceeds from borrowings - Credit Facility | 0 | 14,300 | |||
Proceeds from borrowings - BofA/KeyBank Loan | 250,000 | 0 | |||
Proceeds from borrowings - Term Loan | 113,000 | 0 | |||
Principal payoff of indebtedness - Credit Facility | (357,673) | 0 | |||
Deferred financing costs | (6,583) | (30) | |||
Issuance of common stock | 7,465 | 38,923 | |||
Offering costs | (3,660) | (6,695) | |||
Repurchase of common stock | (18,900) | (3,798) | |||
Distributions paid to common stockholders | (15,420) | (14,318) | |||
Distributions paid to noncontrolling interests | (45) | (8) | |||
Net cash (used in) provided by financing activities | (31,816) | 28,374 | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,378 | (4,987) | |||
Cash, cash equivalents and restricted cash at the beginning of the period | 46,050 | 63,561 | $ 63,561 | ||
Cash, cash equivalents and restricted cash at the end of the period | 48,428 | 58,574 | 48,428 | 58,574 | $ 46,050 |
Supplemental Disclosures of Significant Non-Cash Transactions: | |||||
Reclassification from escrow account receivables to building and improvements | 2,905 | 0 | |||
Decrease in fair value swap agreement | $ (348) | $ (87) | (641) | (17) | |
Increase in Stockholder Servicing Fee Payable | 174 | 564 | |||
Increase in distribution payable to common stockholders | 77 | 118 | |||
Common stock issued pursuant to the distribution reinvestment plan | $ 16,422 | $ 16,546 |
Organization |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Griffin Capital Essential Asset REIT II, Inc., a Maryland corporation (the “Company”), was formed on November 20, 2013 under the Maryland General Corporation Law and qualified as a real estate investment trust (“REIT”) commencing with the year ended December 31, 2015. The Company was organized primarily with the purpose of acquiring single tenant net lease properties that are considered essential to the occupying tenant, and has used a substantial amount of the net proceeds from its initial public offering ("IPO") to invest in such properties. The Company’s year end is December 31. Griffin Capital Company, LLC, a Delaware limited liability company (the “Sponsor”), is the sponsor of the Company. The Sponsor, which was formerly known as Griffin Capital Corporation, began operations in 1995 to engage principally in acquiring and developing office and industrial properties. Kevin A. Shields, the Company's Chief Executive Officer and Chairman of the Company's board of directors, controls the Sponsor. Griffin Capital Essential Asset Advisor II, LLC, a Delaware limited liability company (the “Advisor”), was formed on November 19, 2013. Griffin Capital Real Estate Company, LLC, a Delaware limited liability company ("GRECO"), is the sole member of the Advisor and Griffin Capital, LLC, a Delaware limited liability company ("GC"), is the sole member of GRECO. The Sponsor is the sole member of GC. The Advisor is responsible for managing the Company’s affairs on a day-to-day basis and identifying and making acquisitions and investments on behalf of the Company under the terms of the Advisory Agreement (as defined below). The Company's officers are also officers of the Advisor and officers of the Sponsor. Griffin Capital Securities, LLC (the “Dealer Manager”) is a Delaware limited liability company and is a wholly-owned subsidiary of GC. The Dealer Manager is responsible for marketing the Company’s shares offered pursuant to the Company's public offerings. The Company’s property manager is Griffin Capital Essential Asset Property Management II, LLC, a Delaware limited liability company (the “Property Manager”), which was formed on November 19, 2013 to manage the Company’s properties, or provide oversight of other property managers engaged by the Company or an affiliate of the Company. The Property Manager derives substantially all of its income from the property management services it performs for the Company. Griffin Capital Essential Asset Operating Partnership II, L.P., a Delaware limited partnership (the “Operating Partnership”), was formed on November 21, 2013. On February 11, 2014, the Advisor purchased a 99% limited partnership interest and special limited partnership interest in the Operating Partnership for $0.2 million and on February 11, 2014, the Company contributed the initial one thousand dollars capital contribution it received to the Operating Partnership in exchange for a 1% general partner interest. The Operating Partnership owns, and will own, directly or indirectly, all of the properties acquired by the Company. The Operating Partnership will conduct certain activities through the Company’s taxable REIT subsidiary, Griffin Capital Essential Asset TRS II, Inc., a Delaware corporation (the “TRS”), formed on November 22, 2013, which is a wholly-owned subsidiary of the Operating Partnership. The TRS had no activity as of September 30, 2018. In 2014, the Company registered $2.2 billion in common shares in its IPO, consisting of $2.0 billion in common shares to be offered to the public in the primary portion of the IPO and $200.0 million in common shares for sale pursuant to the Company's distribution reinvestment plan (“DRP”). (See Note 8, Equity, for additional details.) In September 2016, the Company's board of directors approved the close of the primary portion of the IPO effective January 20, 2017; however, the Company continued to offer shares pursuant to the DRP under the Company's IPO registration statement through May 2017. On April 6, 2017, the Company filed a Registration Statement on Form S-3 with the Securities and Exchange Commission ("SEC") for the registration of 3.0 million shares for sale pursuant to the DRP. The DRP may be terminated at any time upon 10 days’ prior written notice to stockholders, which may be provided through the Company's filings with the SEC. On September 20, 2017, the Company commenced a follow-on offering of up to $2.2 billion of shares (the "Follow-On Offering"), consisting of up to $2.0 billion of shares in the Company's primary offering and $0.2 billion of shares pursuant to the DRP. Pursuant to the Follow-On Offering, the Company offered to the public four new classes of shares of common stock: Class T shares, Class S shares, Class D shares and Class I shares (the “New Shares”) with net asset value (“NAV”) based pricing. The share classes have different selling commissions, dealer manager fees and ongoing distribution fees. In connection with the Follow-On Offering, the Company reclassified all Class T and Class I shares sold in the IPO as "Class AA" and "Class AAA" shares, respectively. On September 20, 2017, the Company entered into an amended and restated advisory agreement (the "Advisory Agreement") with the Advisor and the Operating Partnership, which replaced the original advisory agreement and modified various provisions including the fees and expense reimbursements payable to the Advisor. See Note 10, Related Party Transactions, for additional details. On September 20, 2017, the Company, as general partner of the Operating Partnership, entered into a Third Amended and Restated Limited Partnership Agreement of the Operating Partnership (the "Third Amended and Restated Operating Partnership Agreement") on behalf of itself and the limited partners. The Third Amended and Restated Operating Partnership Agreement is substantially similar to the Company's prior limited partnership agreement, except that it has been updated to reflect changes to the distributions and fees to which the Advisor is entitled, include additional classes of Operating Partnership units, and make other conforming changes. See Note 10, Related Party Transactions, for additional details. In connection with the Follow-On Offering, the Company's board of directors adopted an amended and restated DRP effective as of September 30, 2017 to include the New Shares under the DRP. In connection with the Follow-On Offering, the Company’s board of directors adopted a share redemption program for the New Shares (the “New Share Redemption Program”). Under this program, stockholders of the New Shares are allowed to redeem their shares after a one-year holding period at a redemption price equal to the NAV per share for the applicable class generally on the 13th of the month prior to quarter end. On March 30, 2018, the board of directors of the Company amended the IPO Share Redemption Program (as defined in Note 8, Equity). The key change to the IPO Share Redemption Program is that after one year from the purchase date, a stockholder will be able to redeem at 100% of the NAV of the applicable share class. The amendment took effect on May 2, 2018. See Note 8, Equity, for additional details. On June 4, 2018, the board of directors of the Company approved the termination of the IPO Share Redemption Program, effective as of July 5, 2018. In addition, effective as of such date, the board of directors amended and restated the New Share Redemption Program in order to allow stockholders of the IPO shares to utilize the New Share Redemption Program. Accordingly, beginning in July 2018, stockholders of IPO shares will be able to continue to redeem at 100% of the NAV of the applicable share class, subject to the other limitations and conditions of the amended and restated New Share Redemption Program. On August 16, 2018, in connection with a potential strategic alternative the Company’s board of directors is contemplating, the board approved the temporary suspension of the primary portion of the Company's Follow-On Offering, effective August 17, 2018, to allow the special committee of the board to evaluate a potential strategic alternative. The board of directors intends to recommence the Follow-On Offering in the retail marketplace, if appropriate and at the appropriate time. |
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies There have been no significant changes to the Company’s accounting policies since the Company filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2017. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC. The accompanying unaudited consolidated financial statements of the Company are prepared by management on the accrual basis of accounting and in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited consolidated financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The consolidated financial statements of the Company include all accounts of the Company, the Operating Partnership, and its subsidiaries. Intercompany transactions are not shown on the consolidated statements. However, each property owning entity is a wholly owned subsidiary which is a special purpose entity ("SPE"), which assets and credit are not available to satisfy the debts or obligations of any other entity, except to the extent required with respect to any co-borrower or guarantor under the same credit facility. Use of Estimates The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Change in Consolidated Financial Statements Presentation During the year ended December 31, 2017, the Company elected to early adopt Accounting Standards Update ("ASU") No. 2016-18, Restricted Cash ("ASU No. 2016-18"). As a result, the Company no longer presents transfers between cash and restricted cash in the consolidated statements of cash flows. Instead, restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows. Per Share Data The Company reports earnings per share for the period as (1) basic earnings per share computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period, and (2) diluted earnings per share computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding, including common stock equivalents. As of September 30, 2018 and December 31, 2017, there were no material common stock equivalents that would have a dilutive effect on earnings (loss) per share for common stockholders. Segment Information ASC Topic 280, Segment Reporting, establishes standards for reporting financial and descriptive information about a public entity’s reportable segments. The Company internally evaluates all of the properties and interests therein as one reportable segment. Recently Issued Accounting Pronouncements In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging ("ASU No. 2017-12") . The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. For cash flow hedges that are highly effective, the new standard requires all changes (effective and ineffective components) in the fair value of the hedging instrument to be recorded in other comprehensive income and to be reclassified into earnings only when the hedged item impacts earnings. Current guidance requires a periodic recognition of hedge ineffectiveness in earnings. Under existing standards, a quantitative assessment is made on an ongoing basis to determine if a hedge is highly effective in offsetting changes in cash flows associated with the hedged item. Under the new standard, entities will still be required to perform an initial quantitative test. However, the new standard allows entities to elect to subsequently perform only a qualitative assessment unless facts and circumstances change. This ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company elected to early adopt ASU No. 2017-12 for the reporting period ending March 31, 2018. The adoption of ASU No. 2017-12 did not have a material effect on the Company's financial position or statement of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU No. 2016-02"). ASU No. 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 will direct how the Company accounts for payments from the elements of leases that are generally fixed and determinable at the inception of the lease (“Fixed Lease Payments”) while ASU No. 2014-09 (defined below) will direct how the Company accounts for the non-lease components of lease contracts, primarily expense reimbursements (“Non-Lease Payments”) and the accounting for the disposition of real estate facilities. ASU No. 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU No. 2016-02 as of its issuance is permitted. ASU No. 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Based on the required adoption date of January 1, 2019, the modified retrospective method for ASU No. 2016-02 requires application of the standard to all leases that exist at, or commence after, January 1, 2017 (beginning of the earliest comparative period presented in the 2019 financial statements), with a cumulative adjustment to the opening balance of accumulated earnings (deficit) on January 1, 2017, for the effect of applying the standard at the date of initial application, and restatement of the amounts presented prior to January 1, 2019. The FASB has also issued an amendment to the standard that would provide an entity an optional transition method to initially account for the impact of the adoption of the standard with a cumulative adjustment to accumulated earnings (deficit) on January 1, 2019 (the effective date of ASU No. 2016-02), rather than January 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. Under ASU No. 2016-02, an entity may elect a practical expedient package, which states that: (a) an entity need not reassess whether any expired or existing contracts are leases or contain leases; (b) an entity need not reassess the lease classification for any expired or existing leases; and (c) an entity need not reassess initial direct costs for any existing leases. These three practical expedients are available as a single election that must be elected as a package and must be consistently applied to all existing leases at the date of adoption. The FASB has also tentatively noted in May 2017 board meeting minutes that lessors that adopt this package of practical expedients are not expected to reassess expired or existing leases at the date of initial application, which is January 1, 2017 under ASU No. 2016-02, or January 1, 2019, if the Company elects the optional transition method. The FASB noted that the transition provisions generally enable entities to “run off” their existing leases for the remainder of the lease term, which would effectively eliminate the need to calculate adjustment to the opening balance of accumulated earnings (deficit). In March 2018, the FASB approved a proposal to the drafting of an amendment to the ASU to allow lessors to elect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. If adopted, this single-lease component practical expedient will allow lessors to elect a combined single-lease component presentation if (i) the timing and pattern of transfer of the lease component and the non-lease component(s) associated with it are the same, and (ii) the lease component would be classified as an operating lease if it were accounted for separately. Non-lease components that do not meet the criteria of this practical expedient and combined components in which the non-lease component is the predominant component will be accounted for under the new revenue recognition ASU. The Company does not expect that ASU No. 2016-02 will impact the Company's accounting for Fixed Lease Payments because the Company's accounting policy is currently consistent with the provisions of the standard. The Company is currently evaluating the impact of the standard as it relates to Non-Lease Payments. If the practical expedient mentioned above is adopted and the Company elects it, the Company expects payments for expense reimbursements that qualify as Non-Lease Payments will be presented under a single lease component presentation. However, without the proposed practical expedient, the Company expects these reimbursements would be separated into Fixed Lease Payments and Non-Lease Payments. Under ASU No. 2016-02, reimbursements relating to property taxes and insurances are Fixed Lease Payments as the payments relates to the right to use the leased assets, while reimbursements relating to maintenance activities and common area expense are Non-Lease Payments and would be accounted under ASU No. 2014-09 upon the adoption of the ASU No. 2016-02 as these payments for goods or services are transferred separately from the right to use the underlying assets. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 replaces substantially all industry-specific revenue recognition requirements and converges areas under this topic with International Financial Reporting Standards. ASU No. 2014-09 implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. ASU No. 2014-09 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Other major provisions in ASU No. 2014-09 include capitalizing and amortizing certain contract costs, ensuring the time value of money is considered in the applicable transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. ASU No. 2014-09 was originally effective for reporting periods beginning after December 31, 2016 (for public entities). On April 1, 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year to annual reporting periods beginning after December 15, 2017. On July 9, 2015, the FASB affirmed its proposal to defer the effective date to annual reporting periods beginning after December 15, 2017, although entities may elect to adopt the standard as of the original effective date. The Company adopted the guidance using the modified retrospective approach for the fiscal year beginning January 1, 2018. The impact was minimal upon adoption of the new accounting guidance on its consolidated financial statements relating to the recognition of gains and losses on the sale of real estate assets as the Company’s current accounting for such transactions is consistent with the new guidance’s core principle. Rental income from leasing arrangements is a substantial portion of the Company’s revenue, is specifically excluded from ASU No. 2014-09 and will be governed by the applicable lease codification ("ASU No. 2016-02"). In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ("ASU No. 2016-08"). The amendments clarify how an entity should identify the unit of accounting (i.e., the specified good or service) for the principal versus agent evaluation, and how it should apply the control principle to certain types of arrangements, such as service transactions, by explaining what a principal controls before the specified good or service is transferred to the customer. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements of ASU No. 2014-09 described above. The Company adopted the guidance using the modified retrospective approach for the fiscal year beginning January 1, 2018. The impact was minimal upon adoption of the new accounting guidance on its consolidated financial statements relating to the recognition of reporting revenue gross versus net on its consolidated financial statements as the Company’s current accounting for such transactions is consistent with the new guidance’s core principle. |
Real Estate |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate | Real Estate As of September 30, 2018, the Company's real estate portfolio consisted of 27 properties (35 buildings) in 17 states consisting of office, industrial, distribution, and data center facilities with a combined acquisition value of $1.1 billion including the allocation of the purchase price to above and below-market lease valuation, encompassing approximately 7.3 million square feet. Depreciation expense for buildings and improvements for the nine months ended September 30, 2018 was $15.3 million. Amortization expense for intangibles, including, but not limited to, tenant origination and absorption costs, for the nine months ended September 30, 2018 was $18.1 million. Future Minimum Contractual Rent Payments The future minimum contractual rent payments pursuant to the current lease terms are shown in the table below. The Company's current leases have expirations ranging from 2021 to 2044.
Intangibles The Company allocated a portion of the acquired real estate asset value to in-place lease valuation and tenant origination and absorption cost. The in-place lease was measured against comparable leasing information and the present value of the difference between the contractual, in-place rent and the fair market rent was calculated using, as the discount rate, the capitalization rate utilized to compute the value of the real estate at acquisition.
The following table sets forth the estimated annual amortization (income) expense for in-place lease valuation, and tenant origination and absorption costs as of September 30, 2018 for the next five years:
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt As of September 30, 2018 and December 31, 2017, the Company's debt and related deferred financing costs consisted of the following:
Amended and Restated Credit Agreement On June 28, 2018, the Company, through the Operating Partnership, entered into an amended and restated credit agreement (the "Amended and Restated Credit Agreement") related to a revolving credit facility and a term loan (collectively, the "Unsecured Credit Facility") with a syndicate of lenders, under which KeyBank, National Association ("KeyBank") serves as administrative agent, and various notes related thereto. In addition, the Company entered into a guaranty agreement. Pursuant to the Amended and Restated Credit Agreement, the Company was provided with a revolving credit facility (the "Revolving Credit Facility") in an initial commitment amount of up to $550 million and a term loan (the "Term Loan") in an initial commitment amount of up to $200 million, which commitments may be increased under certain circumstances up to a maximum total commitment of $1.25 billion. Any increase in the total commitment will be allocated to the Revolving Credit Facility and/or the Term Loan in such amounts as the Operating Partnership and KeyBank may determine.The Revolving Credit Facility may be prepaid and terminated, in whole or in part, at any time without fees or penalty. The Revolving Credit Facility has an initial term of four years, maturing on June 28, 2022. The Revolving Credit Facility may be extended for a one-year period if certain conditions are met and the Operating Partnership pays an extension fee. Payments under the Revolving Credit Facility are interest only and are due on the first day of each quarter. Amounts borrowed under the Revolving Credit Facility may be repaid and reborrowed, subject to the terms of the Amended and Restated Credit Agreement. The Term Loan has an initial term of five years, maturing on June 28, 2023. Payments under the Term Loan are interest only and are due on the first day of each quarter. Amounts borrowed under the Term Loan may not be repaid and reborrowed. The Unsecured Credit Facility has an interest rate calculated based on LIBOR plus the applicable LIBOR margin, as provided in the Amended and Restated Credit Agreement, or the Base Rate plus the applicable base rate margin, as provided in the agreement. The applicable LIBOR margin and base rate margin are dependent on the consolidated leverage ratio of the Operating Partnership, the Company, and the Company's subsidiaries, as disclosed in the periodic compliance certificate provided to the administrative agent each quarter. If the Operating Partnership obtains an investment grade rating of its senior unsecured long term debt from Standard & Poor's Rating Services or Moody's Investors Service, Inc., the applicable LIBOR margin and base rate margin will be dependent on such rating. The Amended and Restated Credit Agreement relating to the Revolving Credit Facility provides that the Operating Partnership must maintain a pool of real properties (each a "Pool Property" and collectively the "Pool Properties") that meet certain requirements contained in the Amended and Restated Credit Agreement. The agreement sets forth certain covenants relating to the Pool Properties, including, without limitation, the following: • there must be no less than 15 Pool Properties; • no greater than 15% of the aggregate pool value may be contributed by a single Pool Property or tenant; • no greater than 15% of the aggregate pool value may be contributed by Pool Properties subject to ground leases; • no greater than 20% of the aggregate pool value may be contributed by Pool Properties which are under development; • the minimum aggregate leasing percentage of all Pool Properties must be no less than 90%; and • other limitations as determined by KeyBank upon further due diligence of the Pool Properties. Borrowing availability under the Amended and Restated Credit Agreement is limited to the lesser of (i) an asset pool leverage ratio of no greater than 60%, or (ii) an asset pool debt service coverage ratio of no less than 1.35:1.00. As of September 30, 2018, the remaining capacity pursuant to the Unsecured Credit Facility was $214.7 million. Bank of America and KeyBank Loan On April 27, 2018, the Company, through four SPEs that own the respective four properties noted below and are owned by the Company's Operating Partnership, entered into a loan agreement (the "Loan Agreement”) with Bank of America, N.A. and KeyBank (together with their successors and assigns, collectively, the "Lender") in which the Company borrowed $250.0 million (the "BofA/KeyBank Loan"). The Company utilized approximately $249.8 million of the proceeds provided by the BofA/KeyBank Loan to pay down a portion of the Company's Revolving Credit Facility. In connection with this pay down of the Company's Revolving Credit Facility, KeyBank released four of the special purpose entities owned by the Company's Operating Partnership from their obligations as guarantors under the Revolving Credit Facility. The BofA/KeyBank Loan is secured by cross-collateralized and cross-defaulted first mortgage liens on the properties with the following tenants: 3M Company, Amazon.com.dedc LLC, Southern Company Services, Inc. and IGT (each, a "Secured Property"). In connection with this transaction, the Company entered into a nonrecourse carve-out guaranty agreement. In addition to their first mortgage lien, the Lender also has a security interest in all other property relating to the ownership, use, maintenance or operation of the improvements on each Secured Property and all rents, profits and revenues from each Secured Property. The BofA/KeyBank Loan has a term of 10 years, maturing on May 1, 2028. The BofA/KeyBank Loan bears interest at an annual rate of 4.32%. Commencing on June 1, 2020, the BofA/KeyBank Loan may be prepaid but only if such prepayment is made in full (with certain exceptions), subject to certain conditions set forth in the Loan Agreement, including 30 days' prior notice to the Lender and payment of a prepayment premium in addition to all unpaid principal and accrued interest to the date of such prepayment. Commencing on November 1, 2027, the BofA/KeyBank Loan may be prepaid in whole or in part, subject to satisfaction of certain conditions, including 30 days' prior notice to the Lender, without payment of any prepayment premium. AIG Loan On October 22, 2015, six SPEs that are wholly-owned by the Operating Partnership entered into promissory notes with The Variable Annuity Life Insurance Company, American General Life Insurance Company, and the United States Life Insurance Company (collectively, the "Lenders"), pursuant to which the Lenders provided such SPEs with a loan in the aggregate amount of approximately $127.0 million (the "AIG Loan"). The AIG Loan has a term of 10 years, maturing on November 1, 2025. The AIG Loan bears interest at a rate of 4.15%. The AIG Loan requires monthly payments of interest only for the first five years and fixed monthly payments of principal and interest thereafter. The AIG Loan is secured by cross-collateralized and cross-defaulted first lien deeds of trust and second lien deeds of trust on certain properties. Commencing October 31, 2017, each of the individual promissory notes comprising the AIG Loan may be prepaid but only if such prepayment is made in full, subject to 30 days' prior notice to the holder and payment of a prepayment premium in addition to all unpaid principal and accrued interest to the date of such prepayment. Debt Covenant Compliance Pursuant to the terms of the Unsecured Credit Facility, BofA/KeyBank Loan and AIG Loan, the Company is subject to certain loan compliance covenants. The Company was in compliance with all applicable covenants as of September 30, 2018. |
Interest Rate Contracts |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Rate Contracts | Interest Rate Contracts Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of debt funding and the use of derivative financial instruments. Specifically, the Company entered into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by expected cash payments principally related to borrowings and interest rates. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company does not use derivatives for trading or speculative purposes. Derivative Instruments The Company entered into an interest rate swap agreement to hedge the variable cash flows associated with the LIBO Rate-based variable-rate debt on the Company's Revolving Credit Facility. The interest rate swap is effective for the period from April 1, 2016 to December 12, 2018 with a notional amount of $100.0 million. Effective as of November 1, 2017, Griffin Capital Essential Asset Operating Partnership, L.P., an affiliated party of the Sponsor, novated one of its $100.0 million swaps to the Operating Partnership, as a result of the repayment of debt. The terms of the cash flow swap are listed in the table below. On April 30, 2018, the Company settled the $100.0 million cash flow hedge contract purchased from Griffin Capital Essential Asset Operating Partnership, L.P., which resulted in the Company receiving a net settlement of approximately $0.1 million. The change in the fair value of derivatives designated and qualifying as cash flow hedges is initially recorded in AOCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income ("AOCI") related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. The following table sets forth a summary of the interest rate swaps at September 30, 2018 and December 31, 2017:
The following table sets forth the impact of the interest rate swaps on the consolidated financial statements for the nine months ended September 30, 2018 and 2017:
During the twelve months subsequent to September 30, 2018, the Company estimates that an additional $0.3 million of income will be recognized from AOCI into earnings. The Company's agreements with the derivative counterparties contain a provision where if the Company defaults on any of the Company's indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender within a specified time period, then the Company could also be declared in default on its derivative obligations. As of September 30, 2018, the fair value of the interest rate swap was in an asset position excluding any adjustment for nonperformance risk related to the Company's derivative counterparty agreement, which was approximately $0.3 million. As of September 30, 2018, the Company had not posted any collateral related to the Company's derivative counterparty agreements. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company is required to disclose fair value information about all financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practicable to estimate fair value. The Company measures and discloses the estimated fair value of financial assets and liabilities utilizing a fair value hierarchy that distinguishes between data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels, as follows: (i) quoted prices in active markets for identical assets or liabilities, (ii) "significant other observable inputs," and (iii) "significant unobservable inputs." "Significant other observable inputs" can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or liability, such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. "Significant unobservable inputs" are typically based on an entity’s own assumptions, since there is little, if any, related market activity. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were no transfers between the levels in the fair value hierarchy during the nine months ended September 30, 2018 and the year ended December 31, 2017. The following tables set forth the assets that the Company measures at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2018:
Financial instruments as of September 30, 2018 and December 31, 2017 consisted of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, other accrued expenses, and borrowings. With the exception of the mortgage loan in the table below, the amounts of the financial instruments presented in the consolidated financial statements substantially approximate their fair value as of September 30, 2018 and December 31, 2017. The fair value of the mortgage loan is estimated by discounting the loan’s principal balance over the remaining term of the mortgage using current borrowing rates available to the Company for debt instruments with similar terms and maturities. The Company determined that the mortgage loan valuation in its entirety is classified in Level 2 of the fair value hierarchy, as the fair value is based on current pricing for debt with similar terms as the in-place debt, and there were no transfers into and out of fair value measurement levels during the nine months ended September 30, 2018 and for the year ended December 31, 2017.
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Accrued Expenses and Other Liabilities |
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Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following as of September 30, 2018 and December 31, 2017:
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Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Equity Status of Offerings On January 20, 2017, the Company closed the primary portion of the IPO; however, the Company continued to offer shares pursuant to the DRP under the IPO registration statement through May 2017. The Company is currently offering shares pursuant to the DRP. The DRP may be terminated at any time upon 10 days’ prior written notice to stockholders, which may be provided through the Company's filings with the SEC. On September 20, 2017, the Company commenced the Follow-On Offering of up to $2.2 billion of shares, consisting of up to $2.0 billion of shares in the Company's primary offering and $0.2 billion of shares (including Class A, Class AA and Class AAA shares) pursuant to the DRP. The Company reclassified all Class T and Class I shares sold in the IPO as "Class AA" and "Class AAA" shares, respectively. The Company offered Class T shares, Class S shares, Class D shares and Class I shares in its Follow-On Offering. On August 16, 2018, in connection with a potential strategic alternative the Company’s board of directors is contemplating, the board approved the temporary suspension of the primary portion of the Company's Follow-On Offering, effective August 17, 2018, to allow the special committee of the board to evaluate a potential strategic alternative. The board of directors intends to recommence the Follow-On Offering in the retail marketplace, if appropriate and at the appropriate time. Share Classes Class T shares, Class S shares, Class D shares, Class I shares, Class A shares, Class AA shares and Class AAA shares vote together as a single class, and each share is entitled to one vote on each matter submitted to a vote at a meeting of the Company's stockholders; provided that with respect to any matter that would only have a material adverse effect on the rights of a particular class of common stock, only the holders of such affected class are entitled to vote. The following table summarizes shares issued and gross proceeds received for each share class as of September 30, 2018 and outstanding shares as of September 30, 2018 and December 31, 2017:
Organizational and Offering Costs Pursuant to the Advisory Agreement, in no event will the Company be obligated to reimburse the Advisor for organizational and offering costs incurred in connection with the Follow-On Offering totaling in excess of 15% (including selling commissions, dealer manager fees, distribution fees and non-accountable due diligence expense allowance, but excluding acquisition expenses or any fees, if ever applicable) of the gross proceeds raised in the Follow-On Offering (excluding gross proceeds from the DRP). If the organizational and offering costs exceed such limits discussed above, within 60 days after the end of the month in which the Follow-On Offering terminates or is completed, the Advisor is obligated to reimburse the Company for any excess amounts. As long as the Company is subject to the Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association (“NASAA REIT Guidelines”), such limitation discussed above will also apply to any future public offerings. As of September 30, 2018, organizational and offering costs relating to the Follow-On Offering were 33.3% (approximately $3.3 million) of gross offering proceeds ($10.0 million), including selling commissions, dealer manager fees and distribution fees. Therefore, if the Follow-On Offering had been terminated on September 30, 2018, the Company would owe the Advisor $1.5 million and the Advisor would be liable for organizational and offering costs incurred by the Company of approximately $1.8 million. Approximately $0.7 million of organizational and offering costs the Advisor is liable for as of September 30, 2018 is deducted from "Due to Affiliates" and the remaining $1.1 million is included in "Other Assets, net" on the consolidated balance sheet. Organizational and offering costs incurred as of September 30, 2018, including those incurred by the Company and due to the Advisor, for the Follow-On Offering are as follows:
Distribution Reinvestment Plan (DRP) The Company has adopted the DRP, which allows stockholders to have dividends and other distributions otherwise distributable to them invested in additional shares of common stock. No sales commissions or dealer manager fees are paid on shares sold through the DRP. The Company may amend or terminate the DRP for any reason at any time upon 10 days' prior written notice to stockholders, which may be provided through the Company's filings with the SEC. IPO Share Redemption Program The Company had a share redemption program for holders of Class A, Class AA, and Class AAA shares ("IPO Shares") who held their shares for less than four years, which enabled IPO stockholders to sell their shares back to the Company in limited circumstances ("IPO Share Redemption Program"). On June 4, 2018, the board of directors of the Company approved the termination of the IPO Share Redemption Program effective as of July 5, 2018. In addition, effective as of such date, the board of directors amended and restated the New Share Redemption Program in order to allow stockholders of the IPO Shares to utilize the New Share Redemption Program. Accordingly, beginning in July 2018, stockholders of IPO Shares are able to continue to redeem at 100% of the NAV of the applicable share class, subject to the other limitations and conditions of the amended and restated New Share Redemption Program, as noted below. Redemption requests must be received by 4:00 p.m. (Eastern time) on the second to last business day of the applicable quarter. During the three and nine months ended September 30, 2018 and 2017, the Company redeemed shares of its outstanding common stock under the IPO Share Redemption Program as follows:
During the nine months ended September 30, 2018, the Company redeemed 1,306,834 shares of common stock under the IPO Share Redemption Program for approximately $12.2 million at a weighted average price per share of 9.36. Since inception, the Company has honored all redemption requests related to the IPO Share Redemption Program and has redeemed a total of 2,097,775 shares of common stock for approximately $19.6 million at a weighted average price per share of $9.34. The Company has funded all redemptions using proceeds from the sale of IPO Shares pursuant to the DRP. For more information regarding the IPO Share Redemption Program, see our Annual Report on Form 10-K for the year ended December 31, 2017. New Share Redemption Program In connection with the Follow-On Offering, the Company’s board of directors adopted the New Share Redemption Program for the New Shares (and IPO Shares that have been held for four years or longer). As noted above, subsequently, on June 4, 2018, the board of directors amended and restated the program to allow stockholders of the IPO Shares to utilize the New Share Redemption Program, effective as of July 5, 2018. Under the New Share Redemption Program, the Company will redeem shares as of the last business day of each quarter. The redemption price will be equal to the NAV per share for the applicable class generally on the 13th of the month prior to quarter end. Redemption requests must be received by 4:00 p.m. (Eastern time) on the second to last business day of the applicable quarter. Redemption requests exceeding the quarterly cap will be filled on a pro rata basis.With respect to any pro rata treatment, redemption requests following the death or qualifying disability of a stockholder will be considered first, as a group, followed by requests where pro rata redemption would result in a stockholder owning less than the minimum balance of $2,500 of shares of the Company's common stock, which will be redeemed in full to the extent there are available funds, with any remaining available funds allocated pro rata among all other redemption requests. All unsatisfied redemption requests must be resubmitted after the start of the next quarter, or upon the recommencement of the New Share Redemption Program, as applicable. There are several restrictions under the New Share Redemption Program. Stockholders generally have to hold their shares for one year before submitting their shares for redemption under the program; however, the Company will waive the one-year holding period in the event of the death or qualifying disability of a stockholder. Shares issued pursuant to the DRP are not subject to the one-year holding period. In addition, the New Share Redemption Program generally imposes a quarterly cap on aggregate redemptions of the Company's shares equal to a value of up to 5% of the aggregate NAV of the outstanding shares as of the last business day of the previous quarter. As the value on the aggregate redemptions of the Company's shares is outside the Company's control, the 5% quarterly cap is considered to be temporary equity and is presented as the common stock subject to redemption on the accompanying consolidated balance sheets. As of September 30, 2018, the quarterly cap was approximately $37.4 million and $6.7 million of common stock was reclassified from common stock to accrued expenses and other liabilities in the consolidated balance sheet as of September 30, 2018. During the three and nine months ended September 30, 2018 and 2017, the Company redeemed shares of its outstanding common stock under the New Share Redemption Program as follows:
Since inception, the Company has honored all redemption requests related to the New Share Redemption Program and has redeemed a total of 693,487 shares of common stock for approximately $6.7 million at a weighted average price per share of $9.62. The Company’s board of directors has the right to modify or suspend the New Share Redemption Program upon 30 days' notice at any time if it deems such action to be in the Company’s best interest. Any such modification or suspension will be communicated to stockholders through the Company’s filings with the SEC. |
Noncontrolling Interests |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interests | Noncontrolling Interests Noncontrolling interests represent limited partnership interests in the Operating Partnership in which the Company is the general partner. The Operating Partnership issued 20,000 Class A limited partnership units for $10.00 per unit on February 11, 2014 to the Advisor in exchange for the initial capitalization of the Operating Partnership. On February 16, 2018, as elected by the Advisor, the Company issued 123,779 Operating Partnership units for $9.57 per unit to the Advisor for the 50% of the 2017 performance distribution allocation that the Advisor elected to receive in Class I limited partnership units. The remaining balance was paid in cash. As of September 30, 2018, noncontrolling interests were approximately 0.18% of total shares outstanding and 0.16% of weighted average shares outstanding (both measures assuming limited partnership units were converted to common stock). The Company evaluates individual noncontrolling interests for the ability to recognize the noncontrolling interest as permanent equity on the consolidated balance sheets at the time such interests are issued and on a continual basis. Any noncontrolling interest that fails to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (a) the carrying amount, or (b) its redemption value as of the end of the period in which the determination is made. The limited partners of the Operating Partnership will have the right to cause the Operating Partnership to redeem their limited partnership units for cash equal to the value of an equivalent number of shares, or, at the Company’s option, the Company may purchase such limited partners' limited partnership units by issuing one share of common stock for each limited partnership unit redeemed. These rights may not be exercised under certain circumstances which could cause the Company to lose its REIT election. Furthermore, limited partners may generally exercise their redemption rights only after their limited partnership units have been outstanding for one year. The limited partnership units are reported on the consolidated balance sheets as noncontrolling interests. The following summarizes the activity for noncontrolling interests for the nine months ended September 30, 2018 and the year ended December 31, 2017:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions Summarized below are the related party costs incurred by the Company for the nine months ended September 30, 2018, and 2017, respectively, and amounts payable as of September 30, 2018 and December 31, 2017:
On September 20, 2017, an affiliated entity of the Sponsor purchased 263,992 New Shares for $2.5 million. As of September 30, 2018, the total outstanding shares owned by affiliates (including DRP) was 563,440. Advisory Agreement In connection with the Follow-On Offering, on September 20, 2017, the Company entered into the Advisory Agreement with the Advisor and the Operating Partnership. The Advisory Agreement is substantially similar to the Original Advisory Agreement, except that the Company will not pay the Advisor any acquisition, financing or other similar fees from proceeds raised in the Follow-On Offering in connection with making investments and will instead pay the Advisor an advisory fee that will be payable in arrears on a monthly basis and accrues daily in an amount equal to 1/365th of 1.25% of the NAV for each class of common stock for each day. Performance Distribution Allocation So long as the Advisory Agreement has not been terminated (including by means of non-renewal), the Advisor will hold a special limited partner interest in the Operating Partnership that entitles it to receive a distribution from the Operating Partnership equal to 12.5% of the total return, subject to a 5.5% hurdle amount and a high water mark, with a catch-up (terms of the performance distribution allocation are included in the Company's 2017 Annual Report on Form 10-K filed on March 9, 2018). Such distribution will be made annually and accrue daily. On February 16, 2018, the Company paid in cash approximately $1.2 million and issued approximately $1.2 million in Class I limited partnership units to the Advisor. The Advisor elected to receive 50% in cash and the remaining in Class I limited partnership units. Operating Expenses The Advisor and its affiliates are entitled to reimbursement for certain expenses incurred on behalf of the Company in connection with providing administrative services, including related personnel costs; provided, however, the Advisor must reimburse the Company for the amount, if any, by which total operating expenses (as defined), including advisory fees, paid during the previous 12 months then ended exceeded the greater of: (i) 2% of the Company’s average invested assets for that 12 months then ended; or (ii) 25% of the Company’s net income, before any additions to reserves for depreciation, bad debts or other expenses connected with the acquisition and disposition of real estate interests and before any gain from the sale of the Company’s assets, for that fiscal year, unless the Company’s board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors. The Advisor may waive or defer all or a portion of these reimbursements or elect to receive Class I shares or Class I units of the Operating Partnership in lieu of these reimbursements at any time and from time to time, in its sole discretion. For the nine months ended September 30, 2018 and 2017, the Company’s total operating expenses did not exceed the 2%/25% guideline. The Company reimbursed the Advisor and its affiliates a portion of the compensation paid by the Advisor and its affiliates for the Company's principal financial officer, Javier F. Bitar, executive vice president, David C. Rupert, and vice president and secretary, Howard S. Hirsch of approximately $0.6 million and $0.5 million, which is partially included in offering costs with the remaining amount included in corporate operating expenses to affiliates for the nine months ended September 30, 2018 and 2017, respectively, for services provided to the Company, for which the Company does not pay the Advisor a fee. In addition, the Company incurred approximately $0.07 million and $0.1 million in reimbursable expenses to the Advisor for services provided to the Company by certain of its other executive officers for each of the nine months ended September 30, 2018 and 2017, respectively. The reimbursable expenses include components of salaries, bonuses, benefits and other overhead charges and are based on the percentage of time each executive officer spends on the Company's affairs. Dealer Manager Agreement The Company entered into a dealer manager agreement (the "Dealer Manager Agreement") and associated form of participating dealer agreement with the Dealer Manager. The terms of the Dealer Manager Agreement are substantially similar to the terms of the dealer manager agreement from the Company's IPO, except as it relates to the share classes offered and the fees to be received by the Dealer Manager (terms of the Dealer Manager Agreement are included in the Company's 2017 Annual Report on Form 10-K filed on March 9, 2018). Distribution Fees Subject to Financial Industry Regulatory Authority, Inc.'s limitations on underwriting compensation, under the Dealer Manager Agreement the Company will pay the Dealer Manager a distribution fee for ongoing services rendered to stockholders by participating broker-dealers or broker-dealers servicing investors’ accounts, referred to as servicing broker-dealers. The fee accrues daily and is paid monthly in arrears and is calculated based on the average daily NAV for the applicable month (the “Average NAV”). The distribution fees for the different share classes are as follows: (i) with respect to the outstanding Class T shares equal to 1/365th of 1.0% of the Average NAV of the outstanding Class T shares for each day, consisting of an advisor distribution fee of 1/365th of 0.75% and a dealer distribution fee of 1/365th of 0.25% of the Average NAV of the Class T shares for each day; (ii) with respect to the outstanding Class S shares equal to 1/365th of 1.0% of the Average NAV of the outstanding Class S shares for each day; and (iii) with respect to the outstanding Class D shares equal to 1/365th of 0.25% of the Average NAV of the outstanding Class D shares for each day. The Company will not pay a distribution fee with respect to the outstanding Class I shares. The distribution fees will accrue daily and be paid monthly in arrears. The Dealer Manager will reallow the distribution fees to participating broker-dealers and servicing broker-dealers for ongoing services performed by such broker-dealers, and will retain any such distribution fees to the extent a broker-dealer is not eligible to receive them for failure to provide such services. The Dealer Manager will waive the distribution fees for any purchases by affiliates of the Company. The Company will cease paying the distribution fee with respect to any Class T share, Class S share or Class D share held in a stockholder's account at the end of the month in which the Dealer Manager in conjunction with the transfer agent determines that total selling commissions, dealer manager fees and distribution fees paid with respect to all shares from the Follow-On Offering held by such stockholder within such account would exceed, in the aggregate, 9.0% (or a lower limit as set forth in any applicable agreement between the Dealer Manager and a participating broker-dealer) of the gross proceeds from the sale of such shares (including the gross proceeds of any shares issued under the DRP with respect thereto). At the end of such month, such Class T share, Class S share or Class D share (and any shares issued under the DRP with respect thereto) will convert into a number of Class I shares (including any fractional shares) with an equivalent NAV as such share. In addition, the Company will cease paying the distribution fee on the Class T shares, Class S shares and Class D shares on the earlier to occur of the following: (i) a listing of the Company's shares, (ii) a merger or consolidation with or into another entity, or the sale or other disposition of all or substantially all of the Company's assets, including any liquidation of the Company or (iii) the date following the completion of the primary portion of the Follow-On Offering on which, in the aggregate, underwriting compensation from all sources in connection with the Follow-On Offering, including selling commissions, dealer manager fees, the distribution fee and other underwriting compensation, is equal to 9% of the gross proceeds from the Company's primary offering. Conflicts of Interest The Sponsor, Advisor, Property Manager and their officers and certain of their key personnel and their respective affiliates currently serve as key personnel, advisors, managers and sponsors or co-sponsors to some or all of 12 other programs affiliated with the Sponsor, including Griffin Capital Essential Asset REIT, Inc. ("GCEAR"), Griffin-American Healthcare REIT III, Inc. ("GAHR III"), Griffin-American Healthcare REIT IV, Inc. ("GAHR IV") and Phillips Edison Grocery Center REIT III, Inc. ("PECO III"), all of which are publicly-registered, non-traded real estate investment trusts, and Griffin Institutional Access Real Estate Fund ("GIA Real Estate Fund") and Griffin Institutional Access Credit Fund ("GIA Credit Fund"), both of which are non-diversified, closed-end management investment companies that are operated as interval funds under the Investment Company Act of 1940, as amended (the "1940 Act"). Because these persons have competing demands on their time and resources, they may have conflicts of interest in allocating their time between the Company’s business and these other activities. Some of the material conflicts that the Advisor, the Dealer Manager or its affiliates will face are (1) competing demand for time of the Advisor’s executive officers and other key personnel from the Sponsor and other affiliated entities; (2) determining if certain investment opportunities should be recommended to the Company or another program sponsored or co-sponsored by the Sponsor; and (3) influence of the fee structure under the Advisory Agreement and distribution structure of the operating partnership agreement that could result in actions not necessarily in the long-term best interest of the Company's stockholders. The board of directors has adopted the Sponsor’s acquisition allocation policy as to the allocation of acquisition opportunities among the Company and GCEAR, which is as follows: The Sponsor will allocate potential investment opportunities to the Company and GCEAR based on the following factors:
In the event all acquisition allocation factors have been exhausted and an investment opportunity remains equally suitable for the Company and GCEAR, the Sponsor will offer the investment opportunity to the REIT that has had the longest period of time elapse since it was offered an investment opportunity. If the Sponsor no longer sponsors GCEAR, then, in the event that an investment opportunity becomes available that is suitable, under all of the factors considered by the Advisor, for both the Company and one or more other entities affiliated with the Sponsor, the Sponsor has agreed to present such investment opportunities to the Company first, prior to presenting such opportunities to any other programs sponsored by or affiliated with the Sponsor. In determining whether or not an investment opportunity is suitable for more than one program, the Advisor, subject to approval by the board of directors, shall examine, among others, the following factors:
Economic Dependency The Company will be dependent on the Advisor and the Dealer Manager for certain services that are essential to the Company, including the sale of the Company's shares of common stock available for issue, the identification, evaluation, negotiation, purchase and disposition of properties and other investments, management of the daily operations of the Company’s real estate portfolio, and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other resources. |
Commitments and Contingencies |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is the Company aware of any pending or threatened litigation that would have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably. |
Declaration of Distributions |
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Sep. 30, 2018 | |
Declaration of Distributions [Abstract] | |
Declaration of Distributions | Declaration of Distributions During the quarter ended September 30, 2018, the Company paid cash distributions in the amount of $0.0015068493 per day, before adjustments of class-specific expenses, per Class T share, Class S share, Class D share, Class I share, Class A share, Class AA share and Class AAA share on the outstanding shares of common stock payable to stockholders of record at the close of business on each day during the period from July 1, 2018 through September 30, 2018. Such distributions payable to each stockholder of record were paid on such date after the end of each month during the period as determined by the Company's Chief Executive Officer. On September 12, 2018, the Company’s board of directors declared cash distributions in the amount of $0.0015068493 per day, subject to adjustments for class-specific expenses, per Class T share, Class S share, Class D share, Class I share, Class A share, Class AA share, and Class AAA on the outstanding shares of common stock payable to stockholders of record at the close of business on each day during the period from October 1, 2018 through December 31, 2018. Such distributions payable to each stockholder of record will be paid on such date after the end of each month during the period as determined by the Company's Chief Executive Officer. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Offering Status As of November 7, 2018, the Company had issued 7,372,224 shares of the Company’s common stock pursuant to the DRP and Follow-On Offering for approximately $70.2 million. Redemptions On October 1, 2018, the Company paid approximately $6.7 million at a weighted average price per share of $9.62 related to redemption payables. |
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements of the Company are prepared by management on the accrual basis of accounting and in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited consolidated financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
Consolidation | The consolidated financial statements of the Company include all accounts of the Company, the Operating Partnership, and its subsidiaries. Intercompany transactions are not shown on the consolidated statements. However, each property owning entity is a wholly owned subsidiary which is a special purpose entity ("SPE"), which assets and credit are not available to satisfy the debts or obligations of any other entity, except to the extent required with respect to any co-borrower or guarantor under the same credit facility. |
Use of Estimates | Use of Estimates The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. |
Change in Consolidated Financial Statements Presentation | Change in Consolidated Financial Statements Presentation During the year ended December 31, 2017, the Company elected to early adopt Accounting Standards Update ("ASU") No. 2016-18, Restricted Cash ("ASU No. 2016-18"). As a result, the Company no longer presents transfers between cash and restricted cash in the consolidated statements of cash flows. Instead, restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows. |
Per Share Data | Per Share Data The Company reports earnings per share for the period as (1) basic earnings per share computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period, and (2) diluted earnings per share computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding, including common stock equivalents. As of September 30, 2018 and December 31, 2017, there were no material common stock equivalents that would have a dilutive effect on earnings (loss) per share for common stockholders. |
Segment Information | Segment Information ASC Topic 280, Segment Reporting, establishes standards for reporting financial and descriptive information about a public entity’s reportable segments. The Company internally evaluates all of the properties and interests therein as one reportable segment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging ("ASU No. 2017-12") . The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. For cash flow hedges that are highly effective, the new standard requires all changes (effective and ineffective components) in the fair value of the hedging instrument to be recorded in other comprehensive income and to be reclassified into earnings only when the hedged item impacts earnings. Current guidance requires a periodic recognition of hedge ineffectiveness in earnings. Under existing standards, a quantitative assessment is made on an ongoing basis to determine if a hedge is highly effective in offsetting changes in cash flows associated with the hedged item. Under the new standard, entities will still be required to perform an initial quantitative test. However, the new standard allows entities to elect to subsequently perform only a qualitative assessment unless facts and circumstances change. This ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company elected to early adopt ASU No. 2017-12 for the reporting period ending March 31, 2018. The adoption of ASU No. 2017-12 did not have a material effect on the Company's financial position or statement of operations. In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU No. 2016-02"). ASU No. 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 will direct how the Company accounts for payments from the elements of leases that are generally fixed and determinable at the inception of the lease (“Fixed Lease Payments”) while ASU No. 2014-09 (defined below) will direct how the Company accounts for the non-lease components of lease contracts, primarily expense reimbursements (“Non-Lease Payments”) and the accounting for the disposition of real estate facilities. ASU No. 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU No. 2016-02 as of its issuance is permitted. ASU No. 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Based on the required adoption date of January 1, 2019, the modified retrospective method for ASU No. 2016-02 requires application of the standard to all leases that exist at, or commence after, January 1, 2017 (beginning of the earliest comparative period presented in the 2019 financial statements), with a cumulative adjustment to the opening balance of accumulated earnings (deficit) on January 1, 2017, for the effect of applying the standard at the date of initial application, and restatement of the amounts presented prior to January 1, 2019. The FASB has also issued an amendment to the standard that would provide an entity an optional transition method to initially account for the impact of the adoption of the standard with a cumulative adjustment to accumulated earnings (deficit) on January 1, 2019 (the effective date of ASU No. 2016-02), rather than January 1, 2017, which would eliminate the need to restate amounts presented prior to January 1, 2019. Under ASU No. 2016-02, an entity may elect a practical expedient package, which states that: (a) an entity need not reassess whether any expired or existing contracts are leases or contain leases; (b) an entity need not reassess the lease classification for any expired or existing leases; and (c) an entity need not reassess initial direct costs for any existing leases. These three practical expedients are available as a single election that must be elected as a package and must be consistently applied to all existing leases at the date of adoption. The FASB has also tentatively noted in May 2017 board meeting minutes that lessors that adopt this package of practical expedients are not expected to reassess expired or existing leases at the date of initial application, which is January 1, 2017 under ASU No. 2016-02, or January 1, 2019, if the Company elects the optional transition method. The FASB noted that the transition provisions generally enable entities to “run off” their existing leases for the remainder of the lease term, which would effectively eliminate the need to calculate adjustment to the opening balance of accumulated earnings (deficit). In March 2018, the FASB approved a proposal to the drafting of an amendment to the ASU to allow lessors to elect, as a practical expedient, not to allocate the total consideration to lease and non-lease components based on their relative standalone selling prices. If adopted, this single-lease component practical expedient will allow lessors to elect a combined single-lease component presentation if (i) the timing and pattern of transfer of the lease component and the non-lease component(s) associated with it are the same, and (ii) the lease component would be classified as an operating lease if it were accounted for separately. Non-lease components that do not meet the criteria of this practical expedient and combined components in which the non-lease component is the predominant component will be accounted for under the new revenue recognition ASU. The Company does not expect that ASU No. 2016-02 will impact the Company's accounting for Fixed Lease Payments because the Company's accounting policy is currently consistent with the provisions of the standard. The Company is currently evaluating the impact of the standard as it relates to Non-Lease Payments. If the practical expedient mentioned above is adopted and the Company elects it, the Company expects payments for expense reimbursements that qualify as Non-Lease Payments will be presented under a single lease component presentation. However, without the proposed practical expedient, the Company expects these reimbursements would be separated into Fixed Lease Payments and Non-Lease Payments. Under ASU No. 2016-02, reimbursements relating to property taxes and insurances are Fixed Lease Payments as the payments relates to the right to use the leased assets, while reimbursements relating to maintenance activities and common area expense are Non-Lease Payments and would be accounted under ASU No. 2014-09 upon the adoption of the ASU No. 2016-02 as these payments for goods or services are transferred separately from the right to use the underlying assets. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 replaces substantially all industry-specific revenue recognition requirements and converges areas under this topic with International Financial Reporting Standards. ASU No. 2014-09 implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. ASU No. 2014-09 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Other major provisions in ASU No. 2014-09 include capitalizing and amortizing certain contract costs, ensuring the time value of money is considered in the applicable transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. ASU No. 2014-09 was originally effective for reporting periods beginning after December 31, 2016 (for public entities). On April 1, 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year to annual reporting periods beginning after December 15, 2017. On July 9, 2015, the FASB affirmed its proposal to defer the effective date to annual reporting periods beginning after December 15, 2017, although entities may elect to adopt the standard as of the original effective date. The Company adopted the guidance using the modified retrospective approach for the fiscal year beginning January 1, 2018. The impact was minimal upon adoption of the new accounting guidance on its consolidated financial statements relating to the recognition of gains and losses on the sale of real estate assets as the Company’s current accounting for such transactions is consistent with the new guidance’s core principle. Rental income from leasing arrangements is a substantial portion of the Company’s revenue, is specifically excluded from ASU No. 2014-09 and will be governed by the applicable lease codification ("ASU No. 2016-02"). In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ("ASU No. 2016-08"). The amendments clarify how an entity should identify the unit of accounting (i.e., the specified good or service) for the principal versus agent evaluation, and how it should apply the control principle to certain types of arrangements, such as service transactions, by explaining what a principal controls before the specified good or service is transferred to the customer. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements of ASU No. 2014-09 described above. The Company adopted the guidance using the modified retrospective approach for the fiscal year beginning January 1, 2018. The impact was minimal upon adoption of the new accounting guidance on its consolidated financial statements relating to the recognition of reporting revenue gross versus net on its consolidated financial statements as the Company’s current accounting for such transactions is consistent with the new guidance’s core principle. |
Real Estate (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum contractual rent payments | The future minimum contractual rent payments pursuant to the current lease terms are shown in the table below. The Company's current leases have expirations ranging from 2021 to 2044.
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Schedule of allocated real estate asset value | The Company allocated a portion of the acquired real estate asset value to in-place lease valuation and tenant origination and absorption cost. The in-place lease was measured against comparable leasing information and the present value of the difference between the contractual, in-place rent and the fair market rent was calculated using, as the discount rate, the capitalization rate utilized to compute the value of the real estate at acquisition.
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Schedule of estimated annual amortization (income) expense | The following table sets forth the estimated annual amortization (income) expense for in-place lease valuation, and tenant origination and absorption costs as of September 30, 2018 for the next five years:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | As of September 30, 2018 and December 31, 2017, the Company's debt and related deferred financing costs consisted of the following:
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Interest Rate Contracts (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments | The following table sets forth a summary of the interest rate swaps at September 30, 2018 and December 31, 2017:
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Impact of interest rate swap on consolidated statements of operation | The following table sets forth the impact of the interest rate swaps on the consolidated financial statements for the nine months ended September 30, 2018 and 2017:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of assets and liabilities measured on recurring basis | The following tables set forth the assets that the Company measures at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2018:
The Company determined that the mortgage loan valuation in its entirety is classified in Level 2 of the fair value hierarchy, as the fair value is based on current pricing for debt with similar terms as the in-place debt, and there were no transfers into and out of fair value measurement levels during the nine months ended September 30, 2018 and for the year ended December 31, 2017.
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Accrued Expenses and Other Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accrued expenses and other liabilities | Accrued expenses and other liabilities consisted of the following as of September 30, 2018 and December 31, 2017:
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Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of shares issued and gross proceeds for each class | The following table summarizes shares issued and gross proceeds received for each share class as of September 30, 2018 and outstanding shares as of September 30, 2018 and December 31, 2017:
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Organizational and offering costs incurred | Organizational and offering costs incurred as of September 30, 2018, including those incurred by the Company and due to the Advisor, for the Follow-On Offering are as follows:
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Schedule of stock redeemed | During the three and nine months ended September 30, 2018 and 2017, the Company redeemed shares of its outstanding common stock under the New Share Redemption Program as follows:
During the three and nine months ended September 30, 2018 and 2017, the Company redeemed shares of its outstanding common stock under the IPO Share Redemption Program as follows:
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Noncontrolling Interests (Tables) |
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Redeemable noncontrolling interest | The following summarizes the activity for noncontrolling interests for the nine months ended September 30, 2018 and the year ended December 31, 2017:
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Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Summarized below are the related party costs incurred by the Company for the nine months ended September 30, 2018, and 2017, respectively, and amounts payable as of September 30, 2018 and December 31, 2017:
|
Organization - Narrative (Details) |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 02, 2018 |
Sep. 30, 2018 |
Jul. 05, 2018 |
Sep. 20, 2017
USD ($)
stock_class
|
Apr. 06, 2017
shares
|
Jul. 31, 2014
USD ($)
|
Feb. 11, 2014
USD ($)
|
|
Subsidiary, Sale of Stock [Line Items] | |||||||
Limited liability partnership percentage of interest held | 99.00% | ||||||
Limited partnership, purchase price | $ 200,000.0 | ||||||
Initial capital contribution | $ 1,000 | ||||||
General partner percentage interest obtained | 1.00% | ||||||
Offering amount in sales of shares | $ 2,200,000,000 | ||||||
IPO | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Offering amount in sales of shares | 2,000,000,000 | ||||||
Follow-on Offering | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Offering amount in sales of shares | $ 2,200,000,000.0 | ||||||
Number of new classes of common stock | stock_class | 4 | ||||||
Primary Offering | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Offering amount in sales of shares | $ 2,000,000,000.0 | ||||||
Distribution Reinvestment Plan | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock of the Company pursuant to the distribution reinvestment plan (in shares) | $ 200,000,000.0 | $ 200,000,000 | |||||
Share registration of stock to be sold (shares) | shares | 3,000,000.0 | ||||||
New Share Redemption Program | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Minimum holding period for redemption of stock | 1 year | ||||||
Redemption price as percentage of Net Asset Value of outstanding shares (percent) | 100.00% | 100.00% | |||||
New Share Redemption Program | IPO | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Minimum holding period for redemption of stock | 4 years | ||||||
IPO Share Redemption Program | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Minimum holding period for redemption of stock | 1 year | ||||||
Redemption price as percentage of Net Asset Value of outstanding shares (percent) | 100.00% |
Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018
segment
| |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Real Estate - Narrative (Details) $ in Thousands, ft² in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
ft²
state
Property
building
|
Sep. 30, 2017
USD ($)
|
|
Real Estate [Abstract] | ||
Number of properties (property) | Property | 27 | |
Number of buildings (building) | building | 35 | |
Number of states (state) | state | 17 | |
Aggregate purchase price of acquired properties | $ 1,100,000 | |
Area of real estate property (in sqft) | ft² | 7.3 | |
Depreciation of building and improvements | $ 15,284 | $ 15,053 |
Amortization expense | $ 18,100 |
Real Estate - Future Minimum Contractual Rent Payments (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Schedule of future minimum net rent payments | |
Remaining 2018 | $ 19,311 |
2019 | 78,887 |
2020 | 80,492 |
2021 | 72,677 |
2022 | 73,538 |
Thereafter | 528,803 |
Total | $ 853,708 |
Real Estate - In-Place Lease Valuation and Tenant Origination and Absorption Costs (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Above Market Lease [Abstract] | ||
In-place lease valuation (above market) | $ 4,046 | $ 4,046 |
In-place lease valuation (above market), accumulated amortization | (1,030) | (752) |
Intangible assets, net | 3,016 | 3,294 |
Below Market Lease, Net [Abstract] | ||
In-place lease valuation (below market) | (62,070) | (62,070) |
In-place lease valuation (below market) - accumulated amortization | 14,564 | 10,775 |
In-place lease valuation (below market), net | (47,506) | (51,295) |
Tenant Origination and Absorption Cost | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Tenant origination and absorption cost | 240,364 | 240,364 |
Tenant origination and absorption cost - accumulated amortization | (65,264) | (47,165) |
Tenant origination and absorption cost, net | $ 175,100 | $ 193,199 |
Real Estate - Estimated Annual Amortization (Income) Expense for In-Place Lease (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Below Market Lease, Amortization Income, Maturity Schedule [Abstract] | |
Remaining 2018 | $ (1,170) |
2019 | (4,695) |
2020 | (4,695) |
2021 | (3,799) |
2022 | (3,799) |
Tenant Origination and Absorption Cost | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remaining 2018 | 6,033 |
2019 | 24,198 |
2020 | 24,198 |
2021 | 19,715 |
2022 | $ 19,597 |
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
Oct. 22, 2015 |
|
Debt Instrument [Line Items] | ||||
Total Debt | $ 490,055 | $ 484,728 | ||
Unamortized deferred financing costs | (8,482) | (2,880) | ||
Total debt | 481,573 | 481,848 | ||
Mortgage Debt | ||||
Debt Instrument [Line Items] | ||||
Total Debt | 376,970 | 126,970 | ||
Mortgage Debt | BofA / Key Bank Loan | ||||
Debt Instrument [Line Items] | ||||
Total Debt | $ 250,000 | 0 | ||
Contractual interest rate | 4.32% | |||
Effective interest rate (percent) | 4.36% | |||
Mortgage Debt | AIG Loan | ||||
Debt Instrument [Line Items] | ||||
Total Debt | $ 126,970 | 126,970 | ||
Contractual interest rate | 4.15% | |||
Effective interest rate (percent) | 4.22% | |||
Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Total Debt | $ 85 | 357,758 | ||
Effective interest rate (percent) | 3.65% | |||
Line of Credit | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (percent) | 1.50% | 1.30% | ||
Notes Payable, Other Payables | AIG Loan | ||||
Debt Instrument [Line Items] | ||||
Total debt | $ 127,000 | |||
Contractual interest rate | 4.15% | |||
Notes Payable, Other Payables | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Total Debt | $ 113,000 | $ 0 | ||
Effective interest rate (percent) | 3.58% | |||
Notes Payable, Other Payables | Term Loan | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (percent) | 1.25% |
Debt - Narrative (Details) |
9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jun. 28, 2018
USD ($)
|
Apr. 27, 2018
USD ($)
property
entity
|
Mar. 31, 2018 |
Oct. 22, 2015
USD ($)
entity
|
Sep. 30, 2018
USD ($)
property
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
Apr. 01, 2016
USD ($)
|
|
Debt Instrument [Line Items] | ||||||||
Weighted average interest rate (percent) | 3.81% | |||||||
Number of wholly owned SPE | entity | 4 | 6 | ||||||
Number of properties owned by special purpose entities | property | 4 | |||||||
Proceeds used to pay down portion of credit facility | $ 357,673,000 | $ 0 | ||||||
Long-term debt | $ 481,573,000 | $ 481,848,000 | ||||||
Revolving Credit Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Initial term of debt instrument | 4 years | |||||||
Revolving credit facility, extension term | 1 year | |||||||
BofA / Key Bank Loan | Mortgage Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Contractual interest rate | 4.32% | |||||||
BofA / Key Bank Loan | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Initial term of debt instrument | 10 years | |||||||
Loan amount borrowed | $ 250,000,000.0 | |||||||
Contractual interest rate | 4.32% | |||||||
Prior notice period required | 30 days | |||||||
AIG Loan | Mortgage Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Duration monthly payments of interest only | 5 years | |||||||
Contractual interest rate | 4.15% | |||||||
AIG Loan | Notes Payable, Other Payables | ||||||||
Debt Instrument [Line Items] | ||||||||
Duration monthly payments of interest only | 5 years | |||||||
Initial term of debt instrument | 10 years | |||||||
Contractual interest rate | 4.15% | |||||||
Prior notice period required | 30 days | |||||||
Long-term debt | $ 127,000,000 | |||||||
Revolving Credit Facility | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Initial term of debt instrument | 4 years | |||||||
Revolving credit facility current borrowing capacity | $ 550,000,000 | |||||||
Revolving credit facility, maximum borrowing capacity | $ 1,250,000,000.00 | |||||||
Revolving credit facility, extension term | 1 year | |||||||
Number of pool properties called by debt covenant | property | 15 | |||||||
Maximum aggregate pool value to be contributed by single pool property or tenant (percent) | 15.00% | |||||||
Maximum aggregate pool value that may be contributed by Pool Properties subject to ground leases (percent) | 15.00% | |||||||
Maximum aggregate pool value that may be contributed by Pool Properties under development (percent) | 20.00% | |||||||
Minimum aggregate leasing percentage of all Pool Properties (percent) | 90.00% | |||||||
Asset pool leverage ratio (percent) | 60.00% | |||||||
Debt service coverage ratio | 135.00% | |||||||
Remaining borrowing capacity | $ 214,700,000 | |||||||
Proceeds used to pay down portion of credit facility | $ 249,800,000 | |||||||
Number of wholly owned SPEs released from guarantor obligations | entity | 4 | |||||||
Revolving Credit Facility | Key Bank Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Initial term of debt instrument | 5 years | |||||||
Revolving credit facility current borrowing capacity | $ 200,000,000 | |||||||
London Interbank Offered Rate (LIBOR) | ||||||||
Debt Instrument [Line Items] | ||||||||
LIBOR as of the balance sheet date (percent) | 2.11% | |||||||
London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (percent) | 1.50% | 1.30% | ||||||
Interest Rate Swap | ||||||||
Debt Instrument [Line Items] | ||||||||
Notional amount | $ 100,000,000.0 | $ 100,000,000.0 |
Interest Rate Contracts - Narrative (Details) - USD ($) |
9 Months Ended | ||||
---|---|---|---|---|---|
Apr. 30, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
Nov. 01, 2017 |
Apr. 01, 2016 |
|
Derivative [Line Items] | |||||
Income expected to be reclassified in next 12 months | $ 300,000 | ||||
Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Notional amount | 100,000,000.0 | $ 100,000,000.0 | |||
Derivative asset | 310,000 | $ 1,032,000 | |||
Collateral posted | 0 | ||||
Operating Partnership | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Derivative asset | 0 | ||||
Significant Other Observable Inputs | Operating Partnership | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Derivative asset | 65,000 | ||||
Recurring | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Derivative asset | 310,000 | 1,032,000 | |||
Recurring | Significant Other Observable Inputs | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Derivative asset | $ 310,000 | $ 1,032,000 | |||
Recurring | Significant Other Observable Inputs | Operating Partnership | Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Notional amount of swaps novated | $ 100,000,000 | ||||
Cash Flow Hedging | Swap | |||||
Derivative [Line Items] | |||||
Notional amount | $ 100,000,000.0 | ||||
Net settlement received | $ 100,000 |
Interest Rate Contracts - Swap Details (Details) - Interest Rate Swap - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative [Line Items] | ||
Derivative asset | $ 310 | $ 1,032 |
Recurring | ||
Derivative [Line Items] | ||
Derivative asset | $ 310 | 1,032 |
Significant Other Observable Inputs | ||
Derivative [Line Items] | ||
Fixed rate on derivative (percent) | 0.74% | |
Significant Other Observable Inputs | Recurring | ||
Derivative [Line Items] | ||
Derivative asset | $ 310 | 1,032 |
Sponsor | ||
Derivative [Line Items] | ||
Derivative asset | 310 | |
Sponsor | Significant Other Observable Inputs | ||
Derivative [Line Items] | ||
Derivative asset | 967 | |
Operating Partnership | ||
Derivative [Line Items] | ||
Derivative asset | $ 0 | |
Operating Partnership | Significant Other Observable Inputs | ||
Derivative [Line Items] | ||
Fixed rate on derivative (percent) | 1.50% | |
Derivative asset | $ 65 |
Interest Rate Contracts - Impact of Interest Rate Swap on Consolidated Statements of Operation (Details) - Interest Rate Swap - Cash Flow Hedging - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of (gain) recognized in AOCI on derivatives | $ (281) | $ (190) |
Amount of gain reclassified from AOCI into earnings under “Interest expense” | 922 | 207 |
Total interest expense presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded | $ 14,775 | $ 11,445 |
Fair Value Measurements - Schedule of Fair Value (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | $ 310 | $ 1,032 |
Recurring | Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 310 | 1,032 |
Recurring | Interest Rate Swap | Quoted Prices in Active Markets for Identical Assets and Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 0 | 0 |
Recurring | Interest Rate Swap | Significant Other Observable Inputs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 310 | 1,032 |
Recurring | Interest Rate Swap | Significant Unobservable Inputs | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 0 | 0 |
Fair Value | AIG Loan | Mortgage Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt fair value | 119,338 | $ 122,928 |
Carrying Value | AIG Loan | Mortgage Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt fair value | $ 126,970 |
Fair Value Measurements - Narrative (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Fair Value Disclosures [Abstract] | ||
Level 1 to level 2, assets | $ 0 | $ 0 |
Level 2 to level 1, assets | 0 | 0 |
Level 3 in, assets | 0 | 0 |
Level 3 out, assets | 0 | 0 |
Level 1 to level 2, liabilities | 0 | 0 |
Level 2 to level 1, liabilities | 0 | 0 |
Level 3 in, liabilities | 0 | 0 |
Level 3 out, liabilities | $ 0 | $ 0 |
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Prepaid rent | $ 4,866 | $ 4,304 |
Leasing commission payable | 1,900 | 3,783 |
Accrued property taxes | 3,633 | 3,490 |
Interest expense payable | 2,661 | 3,013 |
Redemptions payable | 6,671 | 2,181 |
Other liabilities | 2,034 | 3,132 |
Accrued expenses and other liabilities | $ 21,765 | $ 19,903 |
Equity - Narrative (Details) |
3 Months Ended | 9 Months Ended | 67 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
$ / shares
shares
|
Sep. 30, 2018
USD ($)
shares
|
Sep. 30, 2017
$ / shares
shares
|
Sep. 30, 2018
USD ($)
vote
$ / shares
shares
|
Sep. 30, 2017
$ / shares
shares
|
Sep. 30, 2018
USD ($)
$ / shares
shares
|
Jul. 05, 2018 |
Dec. 31, 2017
USD ($)
|
Sep. 20, 2017
USD ($)
|
Jul. 31, 2014
USD ($)
|
|
Class of Stock [Line Items] | ||||||||||
Offering amount in sales of shares | $ 2,200,000,000 | |||||||||
Number of votes (in votes) | vote | 1 | |||||||||
Percent of organizational and offering costs limit (percent) | 15.00% | |||||||||
Days required for reimbursement of excess amounts | 60 days | |||||||||
Organizational costs as a percentage of gross offering proceeds (percent) | 33.30% | |||||||||
Due to related parties | $ 18,988,000 | $ 18,988,000 | $ 18,988,000 | $ 18,988,000 | $ 16,896,000 | |||||
Written notice needed to amend or terminate the DRP | 10 days | |||||||||
Shares of common stock redeemed (shares) | shares | 2,791,262 | |||||||||
Stock redeemed | $ 5,292,000 | |||||||||
Common stock subject to redemption | $ 37,401,000 | $ 37,401,000 | $ 37,401,000 | $ 37,401,000 | 32,405,000 | |||||
Share Redemption Program | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares of common stock redeemed (shares) | shares | 585,525 | 146,083 | 1,306,834 | 413,842 | ||||||
Stock redeemed | $ 12,200,000 | |||||||||
Weighted average price per share (in dollars per share) | $ / shares | $ 9.65 | $ 9.06 | $ 9.36 | $ 9.18 | ||||||
New Share Redemption Program | ||||||||||
Class of Stock [Line Items] | ||||||||||
Minimum holding period for redemption of stock | 1 year | |||||||||
Redemption price as percentage of Net Asset Value of outstanding shares (percent) | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||||
Shares of common stock redeemed (shares) | shares | 693,487 | 693,487 | 0 | 693,487 | 0 | |||||
Stock redeemed | $ 6,700,000 | |||||||||
Weighted average price per share (in dollars per share) | $ / shares | $ 9.62 | $ 0.00 | $ 9.62 | $ 0.00 | ||||||
Average price per share of stock repurchased (in usd per share) | $ / shares | $ 9.62 | |||||||||
Minimum ownership percentage under share redemption program (percent) | $ 2,500 | $ 2,500 | $ 2,500 | $ 2,500 | ||||||
Quarterly redemption cap as percentage of Net Asset Value of outstanding shares (percent) | 5.00% | |||||||||
Common stock subject to redemption | 37,400,000 | 37,400,000 | $ 37,400,000 | 37,400,000 | ||||||
Written notice required to modify or suspend program | 30 days | |||||||||
IPO | ||||||||||
Class of Stock [Line Items] | ||||||||||
Offering amount in sales of shares | 2,000,000,000 | |||||||||
IPO | Share Redemption Program | ||||||||||
Class of Stock [Line Items] | ||||||||||
Minimum holding period for redemption of stock | 4 years | |||||||||
IPO | New Share Redemption Program | ||||||||||
Class of Stock [Line Items] | ||||||||||
Minimum holding period for redemption of stock | 4 years | |||||||||
Follow-on Offering | ||||||||||
Class of Stock [Line Items] | ||||||||||
Offering amount in sales of shares | $ 2,200,000,000.0 | |||||||||
Primary Offering | ||||||||||
Class of Stock [Line Items] | ||||||||||
Offering amount in sales of shares | 2,000,000,000.0 | |||||||||
Distribution Reinvestment Plan | ||||||||||
Class of Stock [Line Items] | ||||||||||
Common stock of the Company pursuant to the distribution reinvestment plan (in shares) | $ 200,000,000.0 | $ 200,000,000 | ||||||||
Common stock reclassified from common stock to accrued expenses and other liabilities | 6,700,000 | 6,700,000 | $ 6,700,000 | 6,700,000 | ||||||
Organizational and offering costs incurred | IPO | ||||||||||
Class of Stock [Line Items] | ||||||||||
Cumulative organizational costs | 3,300,000 | 3,300,000 | 3,300,000 | 3,300,000 | ||||||
Proceeds from offering | 10,000,000 | |||||||||
Organizational and offering costs advanced by the Advisor | ||||||||||
Class of Stock [Line Items] | ||||||||||
Cumulative organizational costs | 510,000 | 510,000 | 510,000 | 510,000 | ||||||
Due to related parties | 1,305,000 | 1,305,000 | 1,305,000 | 1,305,000 | $ 192,000 | |||||
Organizational and offering costs advanced by the Advisor | If Proposed Offering Terminated | ||||||||||
Class of Stock [Line Items] | ||||||||||
Due to related parties | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | ||||||
Due from related parties | 1,800,000 | 1,800,000 | 1,800,000 | 1,800,000 | ||||||
Organizational and offering costs advanced by the Advisor | Due to Affiliates | ||||||||||
Class of Stock [Line Items] | ||||||||||
Due from related parties | 700,000 | 700,000 | 700,000 | 700,000 | ||||||
Organizational and offering costs advanced by the Advisor | Other Assets | ||||||||||
Class of Stock [Line Items] | ||||||||||
Due from related parties | $ 1,100,000 | $ 1,100,000 | $ 1,100,000 | $ 1,100,000 | ||||||
Common Stock | Share Redemption Program | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares of common stock redeemed (shares) | shares | 2,097,775 | |||||||||
Stock redeemed | $ 19,600,000 | |||||||||
Average price per share of stock repurchased (in usd per share) | $ / shares | $ 9.34 |
Equity - Shares Issued and Gross Proceeds (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Class of Stock [Line Items] | ||
Total redemptions (shares) | (2,791,262) | |
Total shares outstanding (in shares) | 77,660,266 | 77,175,283 |
Class T | ||
Class of Stock [Line Items] | ||
Total redemptions (shares) | 0 | |
Total shares outstanding (in shares) | 226,297 | 4,148 |
Class S | ||
Class of Stock [Line Items] | ||
Total redemptions (shares) | 0 | |
Total shares outstanding (in shares) | 277 | 268 |
Class D | ||
Class of Stock [Line Items] | ||
Total redemptions (shares) | 0 | |
Total shares outstanding (in shares) | 19,157 | 268 |
Class I | ||
Class of Stock [Line Items] | ||
Total redemptions (shares) | 0 | |
Total shares outstanding (in shares) | 803,069 | 267,476 |
Class A | ||
Class of Stock [Line Items] | ||
Total redemptions (shares) | (1,351,178) | |
Total shares outstanding (in shares) | 25,781,325 | 25,995,943 |
Class AA | ||
Class of Stock [Line Items] | ||
Total redemptions (shares) | (1,434,491) | |
Total shares outstanding (in shares) | 49,840,818 | 49,942,471 |
Class AAA | ||
Class of Stock [Line Items] | ||
Total redemptions (shares) | (5,593) | |
Total shares outstanding (in shares) | 989,323 | 964,709 |
IPO | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 733,987 | |
Common stock, number of shares issued (in shares) | 73,694,264 | |
IPO | Class T | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 2,245 | |
Common stock, number of shares issued (in shares) | 224,647 | |
IPO | Class S | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 3 | |
Common stock, number of shares issued (in shares) | 264 | |
IPO | Class D | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 182 | |
Common stock, number of shares issued (in shares) | 18,921 | |
IPO | Class I | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 7,538 | |
Common stock, number of shares issued (in shares) | 786,573 | |
IPO | Class A | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 240,780 | |
Common stock, number of shares issued (in shares) | 24,199,764 | |
IPO | Class AA | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 474,858 | |
Common stock, number of shares issued (in shares) | 47,562,870 | |
IPO | Class AAA | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 8,381 | |
Common stock, number of shares issued (in shares) | 901,225 | |
Distribution Reinvestment Plan | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 58,376 | |
Common stock, number of shares issued (in shares) | 6,152,779 | |
Distribution Reinvestment Plan | Class T | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 16 | |
Common stock, number of shares issued (in shares) | 1,650 | |
Distribution Reinvestment Plan | Class S | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 0 | |
Common stock, number of shares issued (in shares) | 13 | |
Distribution Reinvestment Plan | Class D | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 2 | |
Common stock, number of shares issued (in shares) | 236 | |
Distribution Reinvestment Plan | Class I | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 158 | |
Common stock, number of shares issued (in shares) | 16,496 | |
Distribution Reinvestment Plan | Class A | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 25,328 | |
Common stock, number of shares issued (in shares) | 2,669,097 | |
Distribution Reinvestment Plan | Class AA | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 32,369 | |
Common stock, number of shares issued (in shares) | 3,412,273 | |
Distribution Reinvestment Plan | Class AAA | ||
Class of Stock [Line Items] | ||
Gross proceeds received to date of shares issued | $ 503 | |
Common stock, number of shares issued (in shares) | 53,014 | |
Share Distribution | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 568,485 | |
Share Distribution | Class T | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Share Distribution | Class S | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Share Distribution | Class D | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Share Distribution | Class I | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Share Distribution | Class A | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 263,642 | |
Share Distribution | Class AA | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 300,166 | |
Share Distribution | Class AAA | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 4,677 | |
Restricted stock units issued | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 36,000 | |
Restricted stock units issued | Class T | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Restricted stock units issued | Class S | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Restricted stock units issued | Class D | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Restricted stock units issued | Class I | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Restricted stock units issued | Class A | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Restricted stock units issued | Class AA | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 0 | |
Restricted stock units issued | Class AAA | ||
Class of Stock [Line Items] | ||
Common stock, number of shares issued (in shares) | 36,000 |
Equity - Organizational Costs (Details) - Organizational and offering costs advanced by the Advisor $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Related Party Transaction [Line Items] | |
Cumulative offering costs | $ 2,806 |
Cumulative organizational costs | 510 |
Organizational and offering costs advanced by the Advisor | 1,998 |
Organizational and offering costs paid by the Company | 1,318 |
Costs in excess of limit | (1,820) |
Organizational and offering costs incurred | $ 1,496 |
Equity - Shares Redeemed (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Equity, Class of Treasury Stock [Line Items] | |||||
Shares of common stock redeemed (shares) | 2,791,262 | ||||
New Share Redemption Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Shares of common stock redeemed (shares) | 693,487 | 693,487 | 0 | 693,487 | 0 |
Weighted average price per share (in dollars per share) | $ 9.62 | $ 0.00 | $ 9.62 | $ 0.00 | |
Share Redemption Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Shares of common stock redeemed (shares) | 585,525 | 146,083 | 1,306,834 | 413,842 | |
Weighted average price per share (in dollars per share) | $ 9.65 | $ 9.06 | $ 9.36 | $ 9.18 |
Noncontrolling Interests - Narrative (Details) - $ / shares |
9 Months Ended | ||
---|---|---|---|
Feb. 16, 2018 |
Sep. 30, 2018 |
Feb. 11, 2014 |
|
Operating Partnership | |||
Noncontrolling Interest [Line Items] | |||
Number of common shares that can be issued by Operating Partnership upon redemption of each limited partnership units (shares) | 1 | ||
Duration required prior to which partners can exercise their redemption rights | 1 year | ||
Operating Partnership | Limited Partner | |||
Noncontrolling Interest [Line Items] | |||
Limited partnership units issued (in shares) | 20,000 | ||
Price per partnership unit (in USD per share) | $ 10 | ||
Shares Outstanding | Operating Partnership | |||
Noncontrolling Interest [Line Items] | |||
Ownership percentage by noncontrolling owners (percent) | 0.18% | ||
Weighted Average Shares Outstanding | Operating Partnership | |||
Noncontrolling Interest [Line Items] | |||
Ownership percentage by noncontrolling owners (percent) | 0.16% | ||
The Advisor | |||
Noncontrolling Interest [Line Items] | |||
Limited partnership units issued (in shares) | 123,779 | ||
Price per partnership unit (in USD per share) | $ 9.57 | ||
Percentage of performance distribution allocation | 50.00% |
Noncontrolling Interests - Schedule of Noncontrolling Interests (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | $ 76 | |
Issuance of limited partnership units | 1,185 | |
Distributions to noncontrolling interest | (50) | $ (11) |
Net (loss) income allocation | (431) | 11,119 |
Other comprehensive loss | (641) | 108 |
Ending balance | 1,208 | 76 |
Non- controlling Interests | ||
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||
Beginning balance | 76 | 84 |
Issuance of limited partnership units | 1,185 | 0 |
Distributions to noncontrolling interest | (50) | (11) |
Net (loss) income allocation | (1) | 3 |
Other comprehensive loss | (2) | |
Other comprehensive loss | 0 | |
Ending balance | $ 1,208 | $ 76 |
Related Party Transactions - Schedule of Transactions (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Due to Related Parties [Roll Forward] | |||
Incurred | $ 19,051 | $ 16,502 | |
Due to affiliates | 18,988 | $ 16,896 | |
Corporate operating expenses | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 2,168 | 1,677 | |
Due to affiliates | 806 | 658 | |
Asset management fees | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 0 | 8,027 | |
Due to affiliates | 0 | 0 | |
Property management fees | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 1,365 | 1,347 | |
Due to affiliates | 153 | 158 | |
Performance distribution allocation | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 6,200 | 213 | |
Due to affiliates | 6,224 | 2,394 | |
Advisory fees | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 6,970 | 273 | |
Due to affiliates | 784 | 762 | |
Capitalized Offering - Acquisition fees and expenses | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 0 | 1,099 | |
Due to affiliates | 0 | 0 | |
Capitalized/Offering - Organization and offering expense | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 1,113 | 250 | |
Due to affiliates | 1,305 | 192 | |
Capitalized/Offering - Other costs advanced by the Advisor | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 938 | 604 | |
Due to affiliates | 319 | 285 | |
Capitalized/Offering - Selling commissions | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 66 | 1,127 | |
Due to affiliates | 0 | 0 | |
Capitalized/Offering - Dealer Manager fees | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 11 | 393 | |
Due to affiliates | 0 | 0 | |
Capitalized/Offering - Stockholder servicing fee | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 175 | 565 | |
Due to affiliates | 9,353 | 12,377 | |
Organization and offering expenses | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 45 | 136 | |
Due to affiliates | 44 | 8 | |
Advisor advances - Dealer Manager fees | |||
Due to Related Parties [Roll Forward] | |||
Incurred | 0 | $ 791 | |
Due to affiliates | $ 0 | $ 62 |
Related Party Transactions - Narrative (Details) $ in Thousands, ft² in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Feb. 16, 2018
USD ($)
|
Sep. 20, 2017
USD ($)
shares
|
Sep. 30, 2018
USD ($)
ft²
shares
|
Sep. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Related Party Transaction [Line Items] | |||||
Area of real estate property (in sqft) | ft² | 7.3 | ||||
Total transaction price | $ 1,182,057 | $ 1,178,866 | |||
Percent of organizational and offering costs limit (percent) | 15.00% | ||||
Incurred | $ 19,051 | $ 16,502 | |||
Underwriting compensation, percent of gross proceeds | 9.00% | ||||
Outstanding shares owned by affiliates (shares) | shares | 563,440 | ||||
Class T | |||||
Related Party Transaction [Line Items] | |||||
Daily accrual rate for shares sold (percent) | 0.00274% | ||||
Class S | |||||
Related Party Transaction [Line Items] | |||||
Daily accrual rate for shares sold (percent) | 0.00274% | ||||
Class D | |||||
Related Party Transaction [Line Items] | |||||
Daily accrual rate for shares sold (percent) | 0.00068% | ||||
The Advisor | |||||
Related Party Transaction [Line Items] | |||||
Shares sold to Advisor (shares) | shares | 263,992 | ||||
Shares sold to Advisor | $ 2,500 | ||||
Organizational and offering costs advanced by the Advisor | |||||
Related Party Transaction [Line Items] | |||||
Incurred | $ 1,113 | 250 | |||
Advisory Agreement | Class T | |||||
Related Party Transaction [Line Items] | |||||
Daily accrual rate for shares sold (percent) | 0.00342% | ||||
Performance distribution allocation | |||||
Related Party Transaction [Line Items] | |||||
Performance Distribution, Hurdle Rate, Annualized Rate Of Return On Net Asset Value | 5.50% | ||||
Related Party Transaction, Amounts of Transaction | $ 1,200 | ||||
Percentage of performance distribution allocation | 12.50% | ||||
Incurred | $ 6,200 | 213 | |||
Dealer Manager Agreement | |||||
Related Party Transaction [Line Items] | |||||
Underwriting compensation, percent of gross proceeds | 10.00% | ||||
Dealer Manager Agreement | Class T | |||||
Related Party Transaction [Line Items] | |||||
Daily accrual rate for shares sold (percent) | 0.00274% | ||||
Dealer Manager Agreement | Class AA | |||||
Related Party Transaction [Line Items] | |||||
Organizational and offering costs advanced by and due to the Advisor (percent) | 4.00% | ||||
Dealer Distribution Fee | |||||
Related Party Transaction [Line Items] | |||||
Underwriting compensation, percent of gross proceeds | 9.00% | ||||
Dealer Distribution Fee | Class T | |||||
Related Party Transaction [Line Items] | |||||
Daily accrual rate for shares sold (percent) | 0.00068% | ||||
Advisor Distribution Fee | Class T | |||||
Related Party Transaction [Line Items] | |||||
Daily accrual rate for shares sold (percent) | 0.00205% | ||||
Reimbursement, Services Provided That Are not Entitled to Advisor Fees | The Advisor | |||||
Related Party Transaction [Line Items] | |||||
Incurred | $ 600 | 500 | |||
Reimbursement, Reimbursible Expenses | |||||
Related Party Transaction [Line Items] | |||||
Average invested assets for preceding 12 months (percent) | 2.00% | ||||
Percentage of Company's net income before addition of reserves (percent) | 25.00% | ||||
Reimbursement, Reimbursible Expenses | The Advisor | |||||
Related Party Transaction [Line Items] | |||||
Incurred | $ 70 | $ 100 | |||
Acquisition fees and expenses | |||||
Related Party Transaction [Line Items] | |||||
Area of real estate property (in sqft) | ft² | 1.0 | ||||
Total transaction price | $ 80,000 | ||||
Limited partnership units | Performance distribution allocation | |||||
Related Party Transaction [Line Items] | |||||
Related Party Transaction, Amounts of Transaction | $ 1,200 | ||||
Related Party Transaction, Cash Election | 50.00% |
Declaration of Distributions - Narrative (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 12, 2018 |
May 09, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Declaration of Distributions [Abstract] | ||||||
Dividends paid (in USD per share) | $ 0.0015068493 | |||||
Distributions declared, daily accrual (usd per share) | $ 0.0015068493 | $ 0.0015068493 | $ 0.14 | $ 0.14 | $ 0.42 | $ 0.42 |
Subsequent Events - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Nov. 07, 2018 |
Oct. 03, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Subsequent Event [Line Items] | ||||||
Issuance of shares for distribution reinvestment plan | $ 16,422 | $ 16,546 | ||||
Shares of common stock redeemed (shares) | 2,791,262 | |||||
Stock redeemed | $ 5,292 | |||||
Subsequent Event | Distribution Reinvestment Plan | ||||||
Subsequent Event [Line Items] | ||||||
Issuance of shares for distribution reinvestment plan (shares) | 7,372,224 | |||||
Issuance of shares for distribution reinvestment plan | $ 70,200 | |||||
Share Redemption Program | ||||||
Subsequent Event [Line Items] | ||||||
Shares of common stock redeemed (shares) | 585,525 | 146,083 | 1,306,834 | 413,842 | ||
Stock redeemed | $ 12,200 | |||||
Weighted average price per share (in dollars per share) | $ 9.65 | $ 9.06 | $ 9.36 | $ 9.18 | ||
Share Redemption Program | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Stock redeemed | $ 6,700 | |||||
Weighted average price per share (in dollars per share) | $ 9.62 |
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