Real Estate Investments

6 Months Ended

Jun. 30, 2023

As of June 30, 2023, the Company owned or had investments in 525 properties, excluding 23 property developments where rent has yet to commence. The gross real estate investment portfolio, including properties under development, totaled approximately $1.6 billion and consisted of the gross acquisition cost of land, buildings, improvements, and lease intangible assets and liabilities. The investment portfolio is geographically dispersed throughout 45 states with gross real estate investments in Illinois and Texas representing 9.5% and 8.9%, respectively, of the total gross real estate investment of the Company’s entire portfolio.

Acquisitions

During the three months ended June 30, 2023, the Company acquired 28 properties for a total purchase price of $96.2 million, inclusive of $1.0 million of capitalized acquisition costs. During the six months ended June 30, 2023, the Company acquired 48 properties for a total purchase price of $163.9 million, inclusive of $1.7 million of capitalized acquisition costs.

During the three months ended June 30, 2022, the Company acquired 22 properties for a total purchase price of $117.3 million, inclusive of $0.7 million of capitalized acquisition costs. During the six months ended June 30, 2022, the Company acquired 56 properties for a total purchase price of $207.3 million, inclusive of $1.9 million of capitalized acquisition costs.

The acquisitions were all accounted for as asset acquisitions. An allocation of the purchase price and acquisition costs paid for the completed acquisitions is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Land	$	19,748	$	34,419	$	34,052	$	49,073
Buildings	56,869		67,682		100,002		127,770
Site improvements	5,490		5,314		8,969		11,852
Tenant improvements	1,168		1,016		1,559		2,176
In-place lease intangible assets	11,399		13,533		17,809		22,405
Above-market lease intangible assets	1,543		245		1,543		353


	96,217		122,209		163,934		213,629
Liabilities assumed
Below-market lease intangible liabilities	—		(4,893)		—		(6,316)
Accounts payable, accrued expense and other liabilities	—		—		—		(24)
Purchase price (including acquisition costs)	$	96,217	$	117,316	$	163,934	$	207,289

Development

As of June 30, 2023, the Company had 23 property developments under construction. During the three months ended June 30, 2023, the Company invested $17.7 million in property developments. During the six months ended June 30, 2023, the Company invested $22.2 million in property developments, including the acquisition of 20 new build-to-suit projects with a combined initial purchase price of $11.9 million. During the six months ended June 30, 2023, the Company completed development on two projects and reclassified approximately $14.8 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets. Rent commenced for the completed developments in the first quarter of 2023. The remaining 23 developments in progress are expected to be substantially completed with rent commencing at various points throughout the next twelve months. The purchase price, including acquisition costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of June 30, 2023.

During the three months ended June 30, 2022, the Company invested $4.6 million in property developments. During this period, the Company completed development on three projects and reclassified approximately $9.8 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets.

During the six months ended June 30, 2022, the Company invested $9.6 million in property developments, including the acquisition of one new build-to-suit project with an initial purchase price of $1.0 million. During this period, the Company completed development on four projects and reclassified approximately $14.7 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets.

Additionally, during the six months ended June 30, 2023 and 2022, the Company capitalized approximately $0.3 million and $0.1 million, respectively, of interest expense associated with properties under development.

Dispositions

During the three months ended June 30, 2023, the Company sold two properties for a total sales price, net of disposal costs, of $3.8 million, recognizing a gain of $0.6 million. During the six months ended June 30, 2023, the Company sold ten properties for a total sales price, net of disposal costs, of $19.3 million, recognizing a gain of $0.3 million.

During the three months ended June 30, 2022, the Company sold two properties for a total sales price, net of disposal costs, of $9.9 million, recognizing a gain of $1.9 million. During the six months ended June 30, 2022, the Company sold three properties for a total sales price, net of disposal costs, of $12.2 million, recognizing a gain of $2.0 million.

Investment in Mortgage Loans Receivable

The Company’s mortgage loans receivable portfolio as of June 30, 2023 and December 31, 2022 is summarized below (in thousands):


Loan Type	Number of Secured Properties	Effective Interest Rate (4)	Stated Interest Rate	Maturity Date	June 30, 2023		December 31, 2022
Mortgage (1)	1	5.75%	6.00%	7/26/2023	$	40,316	$	40,316
Mortgage (1) (2)	2	5.77%	6.50%	6/30/2023	6,000		6,000
Mortgage	46	9.55%	9.55%	3/10/2026	41,940		—
Mortgage (3)	3	8.03%	6.89%	4/10/2026	4,132		—
Mortgage (3)	10	7.57%	7.57%	6/10/2025	15,505		—
Total					107,893		46,316
Unamortized loan origination costs					6		62
Unamortized discount					(141)		—
Total mortgage loans receivable, net					$	107,758	$	46,378

(1) The Company has the right, subject to certain terms and conditions, to purchase all or a portion of the underlying collateralized property.

(2) The balance is expected to be settled via a like kind exchange subsequent to June 30, 2023.

(3) The stated interest rate is variable up to 15.0% and is calculated based on contractual rent for existing collateralized properties subject to the loan agreement.

(4) Includes amortization of discount and loan origination costs, as applicable.

All of the Company’s mortgage loans receivable require monthly payments of interest only with principal payments occurring as borrower disposes of underlying properties, limited to the Company’s allocated investment by property. Any remaining principal balance will be repaid at or before the maturity date.

Assets Held for Sale

As of June 30, 2023 and December 31, 2022, there were fourteen and eleven properties, respectively, classified as held for sale.

Provisions for Impairment

The Company recorded provisions for impairment of $2.8 million on six properties for both the three and six months ended June 30, 2023. The Company recorded a provision for impairment of $1.1 million on one property for both the three and six months ended June, 30, 2022.