ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code) | ||
(Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
N/A | N/A | N/A |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
☒ | Smaller reporting company | |||||||||||||
Emerging growth company |
PART I | ||||||||
PART II | ||||||||
Item 7. | ||||||||
Item 7A. | ||||||||
Retail Properties | ||||||||||||||||||||||||||||||||||||||||||||||||||
# of Properties | ||||||||||||||||||||||||||||||||||||||||||||||||||
State | Fee Owned | Ground Lease | Total | Square Feet (Buildings) | Lease Income for the year ended December 31, 2022 | Lease income as % of total | Lease Income from Effective Date to December 31, 2021 | Lease income as % of total | ||||||||||||||||||||||||||||||||||||||||||
CA | 18 | 4 | 22 | 3,228 | $ | 19,458 | 19.1 | % | $ | 17,836 | 19.1 | % | ||||||||||||||||||||||||||||||||||||||
TX | 18 | 4 | 22 | 2,246 | 13,781 | 13.5 | % | 12,633 | 13.5 | % | ||||||||||||||||||||||||||||||||||||||||
FL | 8 | 1 | 9 | 1,292 | 8,516 | 8.3 | % | 7,806 | 8.3 | % | ||||||||||||||||||||||||||||||||||||||||
NJ | 5 | 0 | 5 | 883 | 5,050 | 4.9 | % | 4,630 | 4.9 | % | ||||||||||||||||||||||||||||||||||||||||
WA | 3 | 1 | 4 | 666 | 4,532 | 4.4 | % | 4,154 | 4.4 | % | ||||||||||||||||||||||||||||||||||||||||
NY | 1 | 2 | 3 | 469 | 4,311 | 4.2 | % | 3,952 | 4.2 | % | ||||||||||||||||||||||||||||||||||||||||
IL | 5 | 0 | 5 | 845 | 4,072 | 4.0 | % | 3,733 | 4.0 | % | ||||||||||||||||||||||||||||||||||||||||
NV | 2 | 1 | 3 | 438 | 3,419 | 3.4 | % | 3,134 | 3.4 | % | ||||||||||||||||||||||||||||||||||||||||
AZ | 4 | 0 | 4 | 493 | 3,397 | 3.3 | % | 3,114 | 3.3 | % | ||||||||||||||||||||||||||||||||||||||||
MI | 6 | 0 | 6 | 863 | 3,394 | 3.3 | % | 3,111 | 3.3 | % | ||||||||||||||||||||||||||||||||||||||||
OH | 5 | 0 | 5 | 646 | 3,056 | 3.0 | % | 2,801 | 3.0 | % | ||||||||||||||||||||||||||||||||||||||||
PA | 4 | 0 | 4 | 555 | 2,924 | 2.9 | % | 2,681 | 2.9 | % | ||||||||||||||||||||||||||||||||||||||||
CO | 2 | 1 | 3 | 362 | 2,099 | 2.1 | % | 1,924 | 2.1 | % | ||||||||||||||||||||||||||||||||||||||||
KY | 1 | 1 | 2 | 251 | 1,846 | 1.8 | % | 1,692 | 1.8 | % | ||||||||||||||||||||||||||||||||||||||||
NM | 2 | 0 | 2 | 266 | 1,832 | 1.8 | % | 1,679 | 1.8 | % | ||||||||||||||||||||||||||||||||||||||||
Other | 28 | 6 | 34 | 4,088 | 20,463 | 20.0 | % | 18,765 | 20.0 | % | ||||||||||||||||||||||||||||||||||||||||
Total Retail | 112 | 21 | 133 | 17,591 | $ | 102,150 | (a) | 100 | % | $ | 93,645 | (b) | 100 | % |
Sale Date | Location | Property Type | Ownership | Square Footage | Gross Sales Proceeds | Aggregate Proceeds, Net | Gain (Loss) | ||||||||||||||||||||||||||||||||||||||||
1/6/22 | Culver City, CA | Retail | Fee Simple | 204 | $ | 22,000 | $ | 20,961 | $ | 3,651 | |||||||||||||||||||||||||||||||||||||
7/20/22 | Pleasanton, CA | Retail | Fee Simple | 156 | 16,000 | 15,799 | 4,795 | ||||||||||||||||||||||||||||||||||||||||
7/25/22 | Franklin, TN | Retail | Fee Simple | 104 | 5,650 | 5,565 | 273 | ||||||||||||||||||||||||||||||||||||||||
8/25/22 | Nashua, NH | Retail | Fee Simple | 105 | 6,550 | 6,454 | 972 | ||||||||||||||||||||||||||||||||||||||||
8/29/22 | Sterling, VA | Retail | Fee Simple | 126 | 5,650 | 5,546 | (416) | ||||||||||||||||||||||||||||||||||||||||
9/09/22 | Five Property Portfolio | (a) | Retail | Fee Simple | 857 | 53,000 | 51,379 | (1,232) | |||||||||||||||||||||||||||||||||||||||
10/05/22 | Westminster, CA | Retail | Ground Lease | 153 | 23,000 | 22,613 | 7,528 | ||||||||||||||||||||||||||||||||||||||||
11/30/22 | Austin,TX | Retail | Fee Simple | 144 | 13,200 | 12,777 | 3,672 | ||||||||||||||||||||||||||||||||||||||||
12/06/22 | Lafayette, LA | Retail | Fee Simple | 105 | 8,100 | 7,939 | 2,034 | ||||||||||||||||||||||||||||||||||||||||
12/15/22 | The Woodlands, TX | Retail | Fee Simple | 146 | 7,760 | 7,219 | 449 | ||||||||||||||||||||||||||||||||||||||||
2,100 | $ | 160,910 | $ | 156,252 | $ | 21,726 |
Year ended December 31, 2022 | Period from January 30, 2021 to December 31, 2021 | |||||||||||||
Net income | $ | 87,508 | $ | 196,716 | ||||||||||
Adjustments to reconcile to NOI: | ||||||||||||||
Depreciation and amortization of real estate | 20,692 | 35,182 | ||||||||||||
Provision for impairment of investment properties | — | 1,951 | ||||||||||||
Gain on sales of investment properties, net | (21,726) | (109,696) | ||||||||||||
Straight-line rental income, net | 2,498 | (58,037) | ||||||||||||
Amortization of above and below market lease intangibles, net | 1,691 | 405 | ||||||||||||
Interest income | (427) | — | ||||||||||||
Formation expenses | — | 364 | ||||||||||||
Non-cash ground rent expense, net | 6,160 | 5,782 | ||||||||||||
Non-cash ground lease reimbursement income | (4,015) | (3,717) | ||||||||||||
NOI | $ | 92,381 | $ | 68,950 |
Year Ended December 31, 2022 | Period from Effective Date to December 31, 2021 | |||||||||||||
Net income | $ | 87,508 | $ | 196,716 | ||||||||||
Depreciation and amortization of real estate | 20,692 | 35,182 | ||||||||||||
Provision for impairment of investment properties | — | 1,951 | ||||||||||||
Gain on sales of investment properties, net | (21,726) | (109,696) | ||||||||||||
FFO | $ | 86,474 | $ | 124,153 | ||||||||||
FFO per certificate outstanding – basic and diluted | $ | 1.15 | $ | 1.66 | ||||||||||
FFO | $ | 86,474 | $ | 124,153 | ||||||||||
Dead deal costs | 514 | — | ||||||||||||
Formation expenses | — | 364 | ||||||||||||
Operating FFO | $ | 86,988 | $ | 124,517 | ||||||||||
Operating FFO per certificate outstanding – basic and diluted | $ | 1.16 | $ | 1.66 |
SOURCES | USES | ||||||||||
▪ | Rental revenues | ▪ | Operating and general and administrative expenses | ||||||||
▪ | Cash and cash equivalents | ▪ | Sales expenses | ||||||||
▪ | Net proceeds from the sale of real estate | ▪ | Distribution payments |
Year ended December 31, 2022 | Period from Effective Date to December 31, 2021 | ||||||||||
Net cash provided by operating activities | $ | 89,452 | $ | 78,429 | |||||||
Net cash provided by investing activities | 156,163 | 793,647 | |||||||||
Net cash used in financing activities | (824,215) | (270,117) | |||||||||
(Decrease) increase in cash, cash equivalents and restricted cash | (578,600) | 601,959 | |||||||||
Cash, cash equivalents and restricted cash, at beginning of period | 627,522 | 25,563 | |||||||||
Cash, cash equivalents and restricted cash, at end of period | $ | 48,922 | $ | 627,522 |
Payments due by period | |||||
2023 | $ | 4,062 | |||
2024 | $ | 4,124 | |||
2025 | $ | 4,116 | |||
2026 | $ | 4,138 | |||
2027 | $ | 4,197 | |||
Thereafter | $ | 220,159 | |||
Less imputed interest | $ | (203,120) | |||
Total | $ | 37,676 |
Report of Independent Registered Public Accounting Firm (PCAOB ID | |||||
Financial Statements | |||||
Consolidated Balance Sheets | |||||
Consolidated Statements of Operations | |||||
Consolidated Statements of Equity | |||||
Consolidated Statements of Cash Flows | |||||
Notes to Consolidated Financial Statements | |||||
Real Estate and Accumulated Depreciation (Schedule III) |
As of December 31, 2022 | As of December 31, 2021 | ||||||||||
Assets | |||||||||||
Investment properties: | |||||||||||
Land and improvements | $ | $ | |||||||||
Building and other improvements | |||||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Net investment properties | |||||||||||
Cash and cash equivalents | |||||||||||
Accounts receivable | |||||||||||
Lease intangible assets, net | |||||||||||
Right-of-use lease assets | |||||||||||
Assets associated with investment properties held for sale | |||||||||||
Other assets, net | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | $ | |||||||||
Lease intangible liabilities, net | |||||||||||
Lease liabilities | |||||||||||
Liabilities associated with investment properties held for sale | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 6) | |||||||||||
Equity: | |||||||||||
Trust certificates, no par value, | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated distributions in excess of earnings | ( | ( | |||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Year Ended December 31, 2022 | Period from Effective Date to December 31, 2021 | ||||||||||
Revenues: | |||||||||||
Lease income | $ | $ | |||||||||
Expenses: | |||||||||||
Operating expenses | |||||||||||
Depreciation and amortization | |||||||||||
Provision for impairment of investment properties | |||||||||||
General and administrative expenses | |||||||||||
Total expenses | |||||||||||
Other income (expense): | |||||||||||
Gain on sales of investment properties, net | |||||||||||
Other income | |||||||||||
Formation expenses | ( | ||||||||||
Total other income | |||||||||||
Net income | $ | $ | |||||||||
Earnings per certificate – basic and diluted: | |||||||||||
Net income per certificate - basic and diluted | $ | $ | |||||||||
Weighted average number of certificates outstanding – basic and diluted |
Period from the Effective Date to December 31, 2021 | Trust Certificates | Additional Paid-in Capital | Accumulated Distributions in Excess of Earnings | Total Equity | |||||||||||||||||||
Balance as of January 30, 2021 (see Note 1) | $ | $ | $ | ||||||||||||||||||||
Net income | — | ||||||||||||||||||||||
Distributions paid to Certificateholders ($ | — | ( | ( | ||||||||||||||||||||
Balance as of December 31, 2021 | $ | $ | ( | $ | |||||||||||||||||||
Year Ended December 31, 2022 | Trust Certificates | Additional Paid-in Capital | Accumulated Distributions in Excess of Earnings | Total Equity | |||||||||||||||||||
Balance as of January 1, 2022 | $ | $ | ( | $ | |||||||||||||||||||
Net income | — | — | |||||||||||||||||||||
Distributions paid to Certificateholders ($ | — | — | ( | ( | |||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | ( | $ |
Year Ended December 31, 2022 | Period from the Effective Date to December 31, 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Provision for impairment of investment properties | |||||||||||
Gain on sales of investment properties, net | ( | ( | |||||||||
Amortization of above/below market leases, net | |||||||||||
Changes in assets and liabilities: | |||||||||||
Changes in accounts receivable | ( | ||||||||||
Changes in other assets | ( | ( | |||||||||
Changes in right-of-use lease assets | |||||||||||
Changes in accounts payable and accrued expenses | ( | ||||||||||
Changes in lease liabilities | |||||||||||
Changes in other liabilities | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures for investment properties | ( | ||||||||||
Proceeds from sales of investment properties | |||||||||||
Net cash provided by investing activities | |||||||||||
Cash flows from financing activities: | |||||||||||
Acquisition-related costs incurred subsequent to Inception | ( | ||||||||||
Distributions paid to Certificateholders | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents, at beginning of period | |||||||||||
Cash and cash equivalents, at end of period | $ | $ |
Property Type | Ownership | Square Footage (unaudited) | Fair Value | |||||||||||||||||
Retail | Fee Simple | $ | ||||||||||||||||||
Ground Leasehold | ||||||||||||||||||||
Warehouse | Fee Simple | |||||||||||||||||||
$ |
2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
Amortization of: | |||||||||||||||||||||||||||||||||||||||||
Above market lease intangibles (a) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
In-place lease intangibles (a) | |||||||||||||||||||||||||||||||||||||||||
Lease intangible assets, net (b) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Below market lease intangibles (a) | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Lease intangible liabilities, net (b) | $ | $ | $ | $ | $ | $ | $ |
Sale Date | Location | Property Type | Ownership | Square Footage (unaudited) | Gross Sales Proceeds | Aggregate Proceeds, Net | Gain (Loss) | |||||||||||||||||||||||||||||||||||||
1/6/22 | Culver City, CA | Retail | Fee Simple | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
7/20/22 | Pleasanton, CA | Retail | Fee Simple | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
7/25/22 | Franklin, TN | Retail | Fee Simple | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
8/25/22 | Nashua, NH | Retail | Fee Simple | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
8/29/22 | Sterling, VA | Retail | Fee Simple | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
9/9/22 | Five Property Portfolio | (a) | Retail | Fee Simple | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||
10/5/22 | Westminster, CA | Retail | Ground Lease | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
11/30/22 | Austin, TX | Retail | Fee Simple | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
12/6/22 | Lafayette, LA | Retail | Fee Simple | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
12/15/22 | The Woodlands, TX | Retail | Fee Simple | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
$ | $ | $ |
Sale Date | Location | Property Type | Ownership | Square Footage (unaudited) | Gross Sales Proceeds | Aggregate Proceeds, Net | Gain (Loss) | ||||||||||||||||||||||||||||||||||||||||
7/9/21 | San Diego, CA | Retail | Ground Lease | $ | $ | $ | (c) | ||||||||||||||||||||||||||||||||||||||||
7/29/21 | Lone Tree, CO | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
7/29/21 | Frisco, TX | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
9/14/21 | San Bruno, CA | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
9/30/21 | Carson, CA | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
11/3/21 | Houston, TX | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
11/5/21 | San Antonio, TX | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
11/17/21 | Phoenix, AZ | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
11/19/21 | Texas Portfolio | (a) | Retail | Fee Simple | |||||||||||||||||||||||||||||||||||||||||||
12/17/21 | Distribution Center Portfolio | (b) | Warehouse | Fee Simple | |||||||||||||||||||||||||||||||||||||||||||
12/23/21 | Queens, NY | Retail | Fee Simple | (c) | |||||||||||||||||||||||||||||||||||||||||||
12/29/21 | Woodbury, MN | Retail | Fee Simple | ||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ |
December 31, 2021 | |||||
Land and improvements | $ | ||||
Building and other improvements | |||||
Less: accumulated depreciation | ( | ||||
Net investment properties | |||||
Accounts receivable | |||||
Lease intangible assets, net | |||||
Other assets | |||||
Assets associated with investment properties held for sale | |||||
Accounts payable and accrued expenses | |||||
Lease intangible liabilities, net | |||||
Other liabilities | |||||
Liabilities associated with investment properties held for sale | $ |
Lease income related to fixed lease payments | Year Ended December 31, 2022 | Period from the Effective Date to December 31, 2021 | |||||||||||||||
Base rent | $ | $ | (a) | ||||||||||||||
Straight-line rental income, net (b) | ( | ||||||||||||||||
Lease income related to variable lease payments | |||||||||||||||||
Ground lease reimbursement income (c) | |||||||||||||||||
Other | |||||||||||||||||
Amortization of above and below market lease intangibles (d) | ( | ( | |||||||||||||||
Lease income | $ | $ | (e) |
Lease Payments | |||||
2023 | $ | ||||
2024 | $ | ||||
2025 | $ | ||||
2026 | $ | ||||
2027 | $ | ||||
Thereafter | $ | ||||
Total | $ |
Lease Obligations | |||||
2023 | $ | ||||
2024 | $ | ||||
2025 | $ | ||||
2026 | $ | ||||
2027 | $ | ||||
Thereafter | $ | ||||
Less imputed interest | $ | ( | |||
Lease liabilities as of December 31, 2022 | $ |
Sale Date | Location | Property Type | Fair Value (a) | Provision for Impairment | ||||||||||||||||
7/9/21 | San Diego, CA | Retail | $ | |||||||||||||||||
12/23/21 | Queens, NY | Retail | ||||||||||||||||||
$ |
Name | Age | Position | ||||||
Neil Aaronson | 49 | Principal Executive Officer | ||||||
Larry Finger | 69 | Principal Financial Officer |
Name of Beneficial Owner | Title of Class | Number of Trust Certificates Owned | Percentage of Trust Certificates Owned | ||||||||
H/2 Capital Partners(a) 680 Washington Blvd., 7th Floor Stamford, CT 06901 | Trust Certificates | 29,311,680 | 39.08 | % | |||||||
Silver Point Capital, L.P. (b) Two Greenwich Plaza, First Floor Greenwich, CT 06830 | Trust Certificates | 9,757,183 | 13.01 | % | |||||||
Sixth Street Partners, LLC (c) 2100 McKinney Avenue, Suite 1500 Dallas, TX 75201 | Trust Certificates | 7,353,908 | 9.81 | % | |||||||
Owl Creek Asset Management, L.P. (d) 640 Fifth Avenue, 20t h Floor New York, NY 10019 | Trust Certificates | 7,088,981 | 9.45 | % | |||||||
Brigade Capital Management, L.P. (e) 399 Park Avenue, 16th Floor New York, NY 10022 | Trust Certificates | 4,835,085 | 6.45 | % | |||||||
Sculptor Capital LP (f) 9 West 57 Street, 39th Floor New York, NY 10019 | Trust Certificates | 4,054,917 | 5.41 | % |
2022 | 2021 | ||||||||||
Audit Fees (a) | $ | 750 | $ | 750 | |||||||
Audit-Related Fees (b) | — | 147 | |||||||||
All Other Fees (c) | 1 | — | |||||||||
Tax Fees (d) | 194 | 167 | |||||||||
Total Fees | $ | 945 | $ | 1,064 |
Initial Cost | Gross Amount Carried at Close of Period (b) | |||||||||||||||||||||||||||||||||||||||||||
Description | Location | Property Type | Encumbrances | Land | Building & Improvements | Costs Capitalized Subsequent to Acquisition | Land | Building & Improvements | Total | Accumulated Depreciation | Date Acquired | Life upon which Depreciation is Computed | ||||||||||||||||||||||||||||||||
Alderwood Mall | Lynnwood, WA | Retail | $ | $ | $ | $ | $ | $ | $12,724 | $ | 2021 | (c) | ||||||||||||||||||||||||||||||||
Alliance Town Center | Fort Worth, TX | Retail | 4,879 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Antelope Valley Mall | Palmdale, CA | Retail | 7,792 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Arden Fair Mall | Sacramento, CA | Retail | 9,655 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Arrowhead Towne Center | Glendale, AZ | Retail | 10,362 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Ashland Town Center | Ashland, KY | Retail | 3,114 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Baybrook Mall | Friendswood, TX | Retail | 1,580 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Bellis Fair | Bellingham, WA | Retail | 4,294 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Boise Towne Square | Boise, ID | Retail | 9,195 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Brea Mall | Brea, CA | Retail | 933 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Center at Owasso | Owasso, OK | Retail | 2,533 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Cherry Hill Mall | Cherry Hill, NJ | Retail | 10,594 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Clackamas Town Center | Portland (Happy Valley), OR | Retail | 11,622 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Columbia Center | Kennewick, WA | Retail | 13,718 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Coral Ridge Mall | Coralville, IA | Retail | 3,424 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Corbin Park | Overland Park, KS | Retail | 5,173 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Coronado Center | Albuquerque, NM | Retail | 8,800 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Cottonwood Mall | Albuquerque, NM | Retail | 7,647 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Dadeland Mall | Miami, FL | Retail | 1,336 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Danbury Fair | Danbury, CT | Retail | 5,354 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Deerbrook Mall | Humble, TX | Retail | 4,272 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
El Mercado Plaza | El Paso, TX | Retail | 5,050 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Fairmont Center | Pasadena, TX | Retail | 2,571 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
First & Main Town Center | Colorado Springs, CO | Retail | 3,859 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
First Colony Mall | Sugarland, TX | Retail | 5,517 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Florence Mall | Florence, KY | Retail | 7,619 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Fox River Mall | Appleton, WI | Retail | 2,447 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Freehold Raceway Mall | Freehold, NJ | Retail | 9,800 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Galleria at Sunset | Henderson, NV | Retail | 5,321 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Galleria at Tyler | Riverside, CA | Retail | 10,384 | 2021 | (c) | |||||||||||||||||||||||||||||||||||||||
Gateway Shopping Center I & II | Brooklyn, NY | Retail | 5,420 | 2021 | (c) |
Initial Cost | Gross Amount Carried at Close of Period (2) | |||||||||||||||||||||||||||||||||||||||||||
Description | Location | Property Type | Encumbrances | Land | Building & Improvements | Costs Capitalized Subsequent to Acquisition | Land | Building & Improvements | Total | Accumulated Depreciation | Date Acquired | Life upon which Depreciation is Computed | ||||||||||||||||||||||||||||||||
Glendale Galleria | Glendale, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Golden Triangle Mall | Denton, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Grand Traverse Mall | Traverse City, MI | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Hamilton Town Center | Noblesville, IN | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Hawthorn S/C | Vernon Hills, IL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
High Pointe Commons | Harrisburg, PA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Huntington Park CBD | Huntington Park, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Imperial Valley Mall | El Centro, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Killeen Mall | Killeen, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Lakeline Mall | Cedar Park, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Lakeside Mall | Sterling Hts, MI | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Mall Del Norte | Laredo, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Mall of Louisiana | Baton Rouge, LA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Mayaguez Mall | Mayaguez, PR | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Meadowood Mall | Reno, NV | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Meadows Mall | Las Vegas, NV | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Miami International Mall | Miami, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Mid Rivers Mall | St Peters, MO | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Midland Park Mall | Midland, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Mokena Marketplace | Mokena, IL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
New Braunfels T/C at Creekside | New Braunfels, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Newnan Crossing | Newnan, GA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Newport Centre | Jersey City, NJ | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
North Riverside Park Mall | North Riverside, IL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Northridge Fashion Center | Northridge, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Northshore Mall | Peabody, MA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Oak Park Mall | Overland Park, KS | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Oakland Mall | Troy, MI | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Oakridge Court | Algonquin, IL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Orland Square | Orland Park, IL | Retail | 2021 | (c) |
Initial Cost | Gross Amount Carried at Close of Period (2) | |||||||||||||||||||||||||||||||||||||||||||
Description | Location | Property Type | Encumbrances | Land | Building & Improvements | Costs Capitalized Subsequent to Acquisition | Land | Building & Improvements | Total | Accumulated Depreciation | Date Acquired | Life upon which Depreciation is Computed | ||||||||||||||||||||||||||||||||
Pacific View Mall | Ventura, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Palm Valley Cornerstone | Goodyear, AZ | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Pembroke Lakes Mall | Pembroke Pines, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Peninsula Town Center | Hampton, VA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Penn Square Mall | Oklahoma City, OK | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Pier Park | Panama City Beach, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Plaza at West Covina | West Covina, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Plaza Centro | Caguas, PR | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Polaris Fashion Place | Columbus, OH | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Post Oak Mall | College Station, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Promenade at Temecula | Temecula, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Rivertown Crossings | Grandville, MI | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Rockaway Townsquare | Rockaway, NJ | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Rosedale S/C | Roseville, MN | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Ross Park Mall | Pittsburgh, PA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Shackleford Crossing | Little Rock, AR | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Sherman Town Center | Sherman, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Shops at Moore | Moore, OK | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Solano Town Center | Fairfield, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
South Point S/C | Mcdonough, GA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Southaven Towne Center | Southaven, MS | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Southlands S/C | Aurora, CO | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
SouthPark Center | Strongsville, OH | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Southpark Mall | Colonial Hts, VA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Southpark Meadows S/C | Austin, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
St Charles Towne Center | Waldorf, MD | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Staten Island Mall | Staten Island, NY | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Stone Creek Towne Center | Colerain Township, OH | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Stones River Mall | Murfreesboro, TN | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Sunrise Mall | Brownsville, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Superstition Springs Mall | Mesa, AZ | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Teas Crossing | Conroe, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The District | South Jordan, UT | Retail | 2021 | (c) |
Initial Cost | Gross Amount Carried at Close of Period (2) | |||||||||||||||||||||||||||||||||||||||||||
Description | Location | Property Type | Encumbrances | Land | Building & Improvements | Costs Capitalized Subsequent to Acquisition | Land | Building & Improvements | Total | Accumulated Depreciation | Date Acquired | Life upon which Depreciation is Computed | ||||||||||||||||||||||||||||||||
The Loop West | Kissimmee, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Mall at Bay Plaza | Bronx, NY | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Mall at Robinson T/C | Pittsburgh, PA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Mall at Rockingham Park | Salem, NH | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Mall at Turtle Creek | Jonesboro, AR | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Mall at Tuttle Crossing | Dublin, OH | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Mall at Wellington Green | Wellington, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Oaks | Thousand Oaks, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Orchard at Slatten Ranch | Antioch, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Parks at Arlington | Arlington, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Plaza at Shoal Creek | Kansas City, MO | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Shoppes at Buckland Hills | Manchester, CT | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Shops at Fallen Timbers | Maumee, OH | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Shops at Montebello | Montebello, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Shops at Stone Park | Houston, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
The Streets at Southpoint | Durham, NC | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Town Center at Aurora | Aurora, CO | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Twelve Oaks Mall | Novi, MI | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Valle Vista Mall | Harlingen, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Valley Plaza | Bakersfield, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Victoria Gardens | Rancho Cucamonga, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Waterside Marketplace | Chesterfield Townshp, MI | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Waxahachie Towne Center Crossing | Waxahachie, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
West Grand Promenade | Katy, TX | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfarms Mall | Farmington, CT | Retail | 2021 | (c) |
Initial Cost | Gross Amount Carried at Close of Period (2) | |||||||||||||||||||||||||||||||||||||||||||
Description | Location | Property Type | Encumbrances | Land | Building & Improvements | Costs Capitalized Subsequent to Acquisition | Land | Building & Improvements | Total | Accumulated Depreciation | Date Acquired | Life upon which Depreciation is Computed | ||||||||||||||||||||||||||||||||
Westfield Brandon | Brandon, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield Broward | Plantation, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield Countryside | Clearwater, FL | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield Galleria at Roseville | Roseville, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield North County | Escondido, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield Palm Desert | Palm Desert, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield Plaza Bonita | National City, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield Santa Anita | Arcadia, CA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westfield Southcenter | Tukwila, WA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Westmoreland Mall | Greensburg, PA | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
White Marsh Mall | Baltimore, MD | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Wolfchase Galleria | Memphis, TN | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Woodbridge Center | Woodbridge, NJ | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Yuma Palms Regional Center | Yuma, AZ | Retail | 2021 | (c) | ||||||||||||||||||||||||||||||||||||||||
Total properties | $ | $ | $ | $ | $ | $ | $ | $ |
Balance at beginning of period | $ | ||||
Provision for impairment of investment properties | |||||
Sales of investment properties | ( | ||||
Assets associated with investments held for sale | |||||
Costs capitalized subsequent to acquisition | $ | ||||
Balance at December 31, 2021 | $ |
Balance at beginning of period | $ | ||||
Depreciation expense | |||||
Sales of investment properties | ( | ||||
Accumulated depreciation associated with investments held for sale | |||||
Balance at December 31, 2021 | $ |
Exhibit No. | Description | |||||||
3.1*+ | Amended and Restated Pass-Through Trust Agreement, dated as of January 30, 2021, between Copper BidCo LLC, as beneficiary, and GLAS Trust Company LLC, as trustee (incorporated herein by reference to Exhibit 3.1 of the Company’s Registration Statement on Form 10 filed with the Commission on February 5, 2021 (File No. 000-56236)). | |||||||
3.2* | Amendment No. 1 to Amended and Restated Pass Through Trust Agreement, dated as of June 11, 2021, between Copper Bidco LLC and GLAS Trust Company LLC (incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on June 11, 2021 (File No. 000-56236)). | |||||||
3.3* | Amendment No. 2 to Amended and Restated Pass Through Trust Agreement, dated as of December 30, 2021, between Copper Bidco LLC and GLAS Trust Company LLC (incorporated herein by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed with the Commission on January 5, 2022) (File No. 000-56236)). | |||||||
4.1+ | Form of Registration Rights and Resale Cooperation Agreement between the Trust and the Certificateholders named therein (incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 10 filed with the Commission on February 5, 2021 (File No. 000-56236)). | |||||||
10.1* | Management Agreement, dated as of January 30, 2021, between Copper Property CTL Pass Through Trust and Hilco JCP LLC (incorporated herein by reference to Exhibit 10.4 of the Company's Registration Statement on Form 10 filed with the Commission on February 5, 2021 (File No. 000-56236)). | |||||||
10.2* | Amendment No. 1 to Management Agreement, dated as of June 11, 2021, between Copper Property CTL Pass Through Trust and Hilco JCP, LLC (incorporated herein by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on June 11, 2021 (File No. 000-56236)). | |||||||
21.1* | List of Subsidiaries (incorporated herein by reference to Exhibit 21.1 of the Company's Registration Statement on Form 10 filed with the Commission on February 5, 2021 (File No. 000-56236). | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document (filed herewith). | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith). | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith). | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith). | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith). | |||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) (filed herewith). |
By: | /s/ NEIL AARONSON | ||||||||||
Neil Aaronson | |||||||||||
Principal Executive Officer | |||||||||||
Date: | March 7, 2023 | ||||||||||
By: | /s/ LARRY FINGER | ||||||||||
Larry Finger | |||||||||||
Principal Financial Officer | |||||||||||
Date: | March 7, 2023 |
/s/ Neil Aaronson | |||||||||||||||||
Neil Aaronson Principal Executive Officer |
/s/ Larry Finger | |||||||||||||||||
Larry Finger Principal Financial Officer |
/s/ Neil Aaronson | |||||||||||||||||
Neil Aaronson | |||||||||||||||||
Principal Executive Officer |
/s/ Larry Finger | |||||||||||||||||
Larry Finger | |||||||||||||||||
Principal Financial Officer |
Audit Information |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Firm ID | 238 |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Location | Chicago, Illinois |
Consolidated Balance Sheets (Parenthetical) - shares |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Trust certificates, authorized (in shares) | 75,000,000 | 75,000,000 |
Trust certificates, issued (in shares) | 75,000,000 | 75,000,000 |
Trust certificates, outstanding (in shares) | 75,000,000 | 75,000,000 |
Consolidated Statement of Operations - USD ($) $ in Thousands |
11 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2022 |
|
Revenues: | ||
Lease income | $ 146,924 | $ 108,395 |
Expenses: | ||
Operating expenses | 14,262 | 13,691 |
Depreciation and amortization | 35,182 | 20,692 |
Provision for impairment of investment properties | 1,951 | 0 |
General and administrative expenses | 8,145 | 8,914 |
Total expenses | 59,540 | 43,297 |
Other income (expense): | ||
Gain on sales of investment properties, net | 109,696 | 21,726 |
Other income | 684 | |
Formation expenses | (364) | 0 |
Total other income | 109,332 | 22,410 |
Net income | $ 196,716 | $ 87,508 |
Earnings per certificate – basic and diluted: | ||
Net income per certificate - basic (in usd per share) | $ 2.62 | $ 1.17 |
Net income per certificate - diluted (in usd per share) | $ 2.62 | $ 1.17 |
Weighted average number of certificates outstanding – basic (shares) | 75,000,000 | 75,000,000 |
Weighted average number of certificates outstanding – diluted (shares) | 75,000,000 | 75,000,000 |
Consolidated Statement of Equity - USD ($) $ in Thousands |
Total |
Trust Certificates |
Additional Paid-in Capital |
Accumulated Distributions in Excess of Earnings |
---|---|---|---|---|
Balance (in shares) at Jan. 30, 2021 | 75,000,000,000 | |||
Balance at Jan. 30, 2021 | $ 1,952,120 | $ 1,952,120 | $ 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 196,716 | 196,716 | ||
Distributions paid to Certificateholders | (261,466) | (261,466) | ||
Balance (in shares) at Dec. 31, 2021 | 75,000,000,000 | |||
Balance at Dec. 31, 2021 | 1,887,370 | 1,952,120 | (64,750) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 87,508 | 87,508 | ||
Distributions paid to Certificateholders | (824,215) | (824,215) | ||
Balance (in shares) at Dec. 31, 2022 | 75,000,000,000 | |||
Balance at Dec. 31, 2022 | $ 1,150,663 | $ 1,952,120 | $ (801,457) |
Consolidated Statement of Equity (Parenthetical) - $ / shares |
11 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2022 |
|
Statement of Stockholders' Equity [Abstract] | ||
Distributions paid to Certificateholders (usd per share) | $ 3.49 | $ 10.99 |
ORGANIZATION |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Overview Copper Property CTL Pass Through Trust, a New York common law trust (the “Trust,” “we,” “our” or “us”) was formed on December 21, 2020, in connection with the reorganization of Old Copper Company, Inc. (f/k/a J. C. Penney Company, Inc.) (“Old Copper”), effective as of January 30, 2021 (the “Effective Date”) pursuant to the terms of the Amended Joint Chapter 11 Plan of Reorganization of Old Copper and certain of its subsidiaries (collectively, the “Debtors”) (the “Plan of Reorganization”). On the Effective Date, through separate wholly-owned property holding companies (the “PropCos”), the Trust acquired (as discussed below), 160 retail properties (the “Retail Properties”) and six distribution centers (the “Warehouses” and, together with the Retail Properties, the “Properties”), all of which were leased under two Master Leases (as discussed in Note 4) to one or more subsidiaries of Copper Retail JV LLC (“OpCo Purchaser”) (collectively with its subsidiaries, “New JCP”), an entity formed by and under the joint control of Simon Property Group, L.P. and Brookfield Asset Management Inc. During 2021, the Trust sold all six Warehouses. The Trust’s operations consist solely of (i) owning the Properties and interests as lessee of land under non-cancellable ground leases, (ii) leasing the Properties under the terms of the Retail Master Lease (as defined below) to New JCP as the sole tenant and (iii) subject to market conditions and the conditions set forth in the Trust Agreement, selling the Properties to third-party purchasers through the PropCos. As of December 31, 2022, the real estate portfolio consists of 133 Retail Properties, of which 21 are encumbered by ground leases, in the United States across 36 states and Puerto Rico, and comprising 17.6 million square feet of leasable space. Formation On May 15, 2020, the Debtors commenced voluntary cases under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). On October 28, 2020, the Debtors entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with OpCo Purchaser, and Copper Bidco LLC (“PropCo Purchaser” and, together with OpCo Purchaser, the “Purchasers”), an entity formed on behalf of lenders under Old Copper’s (i) senior secured superpriority, priming debtor-in-possession credit facility (the “DIP Facility”), (ii) 5.875% senior secured notes due 2023 (the “First Lien Notes”) and (iii) Amended and Restated Credit and Guaranty Agreement, dated as of June 23, 2016 (the “Term Loan Facility” and together with the First Lien Notes, the “First Lien Debt”), pursuant to which the Purchasers agreed to acquire substantially all of the Debtors’ assets and assume certain of the Debtors’ obligations in connection with the purchased assets. On December 12, 2020, the Debtors filed the Plan of Reorganization which was confirmed by the Bankruptcy Court on December 16, 2020. On December 21, 2020, the Trust was formed in connection with the reorganization of Old Copper. On the Effective Date, the Plan of Reorganization became effective pursuant to its terms, at which point PropCo Purchaser and GLAS Trust Company, LLC, as the Trust's independent third-party trustee (the “Trustee”), entered into an Amended and Restated Trust Agreement (as amended, the “Trust Agreement”). In connection with the consummation of the transactions set forth in the Asset Purchase Agreement and in exchange for a $1 billion aggregate credit bid by PropCo Purchaser, comprising $900 million of claims under the DIP Facility and $100 million of claims, on a pro rata basis, under the First Lien Debt, and simultaneous release of obligations under the DIP Facility and First Lien Debt, Old Copper transferred (or caused its subsidiaries to transfer) its fee simple or ground leasehold title (as applicable) in certain properties to the PropCos and assigned (or caused such subsidiaries to assign) the Master Leases (as defined below) relating to the Properties to the Trust. As a result, as of the Effective Date, the Trust owned, through the PropCos, 160 Retail Properties and six Warehouses, all of which were leased to one or more subsidiaries of New JCP under two Master Leases. In connection with the foregoing, certain of the Debtors' lenders received their pro-rata portion of the equity interest in the Trust, as evidenced by the Trust Certificates (as defined below). The aggregate credit bid was not an indicator of the fair value of the assets and liabilities of the Trust as of the Effective Date, and it does not represent the full extent of debt that was owed to the creditor group. The Trust accounted for the reorganization using fresh start accounting under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 852, which resulted in the Trust becoming a new entity for financial reporting purposes on the Effective Date. Accordingly, all assets and liabilities were recorded at fair value in accordance with accounting requirements for business combinations under ASC 805-20. As of the Effective Date, Old Copper had no ability to exercise any control over the Properties or the Trust and has no affiliation with the Trust. The Trust owns directly or indirectly 100% of the equity or partnership interests (as applicable) in the PropCos. Specifically, the PropCos include (i) CTL Propco I LLC, a Delaware limited liability company, CTL Propco I L.P., a Delaware limited partnership and CTL Propco PR I LLC and CTL Propco PR II LLC, Puerto Rico limited liability companies, which collectively own the fee simple or ground leasehold title (as applicable) to the Retail Properties and (ii) CTL Propco II LLC, a Delaware limited liability company and CTL Propco II L.P., a Delaware limited partnership, which collectively owned the fee simple title to the Warehouses. CTL Propco II LLC and CTL Propco II L.P. were dissolved on October 6, 2022. Trust Agreement The Trust is governed by the Trust Agreement between PropCo Purchaser and the Trustee. The Trust Agreement created a series of equity trust certificates designated as “Copper Property CTL Pass Through Certificates” (the “Trust Certificates”), 75 million of which were issued on the Effective Date. Each Trust Certificate represents a fractional undivided beneficial interest in the Trust and represents the interests of the holders of the Trust Certificates (“Certificateholders”) in the Trust. All Trust Certificateholders shall vote as a single class and shall be in all respects equally and ratably entitled to the benefits of the Trust Agreement without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of the Trust Agreement. The Trustee performs trust administration duties, including treasury management and certificate administration. The Trust pays the Trustee an annual service fee of $100, which is amortized monthly. The Trust incurred trustee fees of $100 and $105 for the year ended December 31, 2022 and for the period from the Effective Date to December 31, 2021, respectively, which are included in “General and administrative expenses” on the accompanying consolidated statements of operations. On December 30, 2021, the Trust amended the Trust Agreement, without the consent of its Certificateholders (as provided in the Trust Agreement), to permit the Trust to invest moneys held by the Trust instead of holding them in non-interest bearing accounts. The Trust has adopted a policy to maintain its cash equivalents in a government money market fund administered by a major bulge bracket investment banking firm which invests its assets only in (i) cash and (ii) securities issued or guaranteed by the United States or certain U.S. government agencies and having a weighted average life and weighted average maturity of no more than 120 days and 60 days, respectively. Each of these government money market funds is managed to maintain a stable net asset value (NAV), thereby eliminating principal risk. Management Agreement The Trust has retained Hilco JCP LLC, an affiliate of Hilco Real Estate LLC, as its independent third-party manager to perform asset management duties with respect to the Properties (together with any of its affiliates, replacement or successor, the “Manager”) pursuant to an agreement with an initial term of 24 months, with automatic six month renewals until the termination of the Trust. The Trust pays the Manager a base management fee (the “Base Fee”) and a fee for each property sold (the “Asset Management Fee”). The Base Fee is an amount equal to the greater of 5.75% of the lease payments of the Properties per month and $333 per month. The Asset Management Fees consist of a closing fee of $50 for each Warehouse sold and a success fee for each Retail Property and Warehouse sold which varies based on the sales proceeds and date sold. The Trust incurred Base Fees of $6,242 and $8,058 for the year ended December 31, 2022 and for the period from the Effective date to December 31, 2021, respectively, which are included in “Operating expenses” on the accompanying consolidated statements of operations, of which $494 and $630 were included in “Accounts payable and accrued expenses” on the accompanying consolidated balance sheets as of December 31, 2022 and 2021, respectively. The Trust incurred Asset Management Fees of $591 and $4,454 for the year ended December 31, 2022 and for the period from the Effective date to December 31, 2021, respectively, which are included in “Gain on sales of investment properties, net” on the accompanying consolidated statements of operations. On May 12, 2021, the Trust filed a preliminary proxy statement with the Securities and Exchange Commission pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended, to solicit consent from Certificateholders to amend the Trust Agreement and Management Agreement. On June 11, 2021, following the expiration of the consent solicitation and upon receipt of the requisite approval from the Certificateholders, the Trust amended the Trust Agreement and the Management Agreement to effectuate the proposed amendments. As a result of the amendments, the Trust is now required to dispose of all Retail Properties by December 10, 2025.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates, judgments and assumptions were required in a number of areas, including, but not limited to, estimating the fair value of the investment properties as of the Effective Date, determining the useful lives of real estate properties, determination of the incremental borrowing rate in ground leases, reasonably certain lease terms for ground and master leases, and evaluating the impairment of long-lived assets. The accompanying consolidated financial statements include the accounts of the Trust, as well as all wholly owned subsidiaries of the Trust. All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries consist of limited liability companies and limited partnerships. The Trust has evaluated the fee arrangements with the Trustee and Manager to determine if they represent a variable interest, and concluded that the fee arrangements do not create a variable interest. The accompanying consolidated financial statements include the year ended December 31, 2022 and the period from the Effective Date to December 31, 2021 (the “Reporting Periods”). Fresh Start Accounting and Investment Properties The Trust determined the fresh start accounting fair value of the investment properties based upon the fair value of the individual assets and liabilities assumed as of the Effective Date, which generally included (i) land and land improvements, (ii) building and other improvements, (iii) in-place lease intangibles, (iv) above and below market lease intangibles and (v) leasehold right-of-use assets and related operating lease liabilities. In estimating the fair value of tangible assets, including land and improvements, building and other improvements for fresh start accounting, as of the Effective Date, the Trust considered available comparable market and industry information. The Trust allocated a portion of the fair value to the estimated in-place lease intangibles based on estimated lease execution costs for similar leases as well as lost rental payments during an assumed lease-up period. The Trust also evaluated each lease as compared to current market rates. If a lease was determined to be above or below market, the Trust allocated a portion of the fair value to such above or below market leases based upon the present value of the difference between the contractual lease payments and estimated market rent payments over the remaining lease term. Renewal periods were included within the lease term in the calculation of above and below market lease values if, based upon factors known at the Effective Date, the Trust concluded that market participants would consider it reasonably certain that the lessee would exercise such options. Fair value estimates used in fresh start accounting, including the capitalization rates and discount rate used, required the Trust to consider various factors, including, but not limited to, market knowledge, demographics, age and physical condition of the property, geographic location, size and location of tenant spaces within the investment properties, and tenant profile. The portion of the fair value allocated to in-place lease intangibles is amortized on a straight-line basis over the life of the related lease as a component of depreciation and amortization expense. With respect to leases in which the Trust is the lessor, the portion of fair value allocated to above and below market lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to lease income. With respect to ground leases (in which the Trust is the lessee), a lease liability is measured at the present value of the remaining lease payments and the right-of-use lease (ROU) asset is initially measured as the same amount as the lease liability and adjusted for any above or below market ground lease intangibles. All options terms were assumed to be exercised through the initial term of the Master Lease. On the Effective Date, the Trust assumed a liability of $8,651 related to transaction costs. Such costs were required to be incurred in order for the emergence from bankruptcy to take place, and are therefore considered pre-emergence costs (costs incurred prior to the change in control). This assumed liability decreased the net assets of the Trust by $8,651 as of the Effective Date. Ordinary repairs and maintenance will be expensed as incurred. Expenditures for significant improvements will be capitalized. Depreciation expense is computed using the straight-line method. Building and other improvements are depreciated based upon estimated useful lives which range from 19 to 43 years for building and other improvements. Tenant improvements not considered a component of the building are amortized on a straight-line basis over the lesser of the estimated remaining useful life of the asset or the term of the lease. Impairment of Investment Properties The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At such evaluation date, the Trust separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment indicators include, but are not limited to: •a significant change in the credit quality of tenant; •a reduction in anticipated holding period; •a significant decrease in market price; and •any other quantitative or qualitative events or factors deemed significant by the Trust’s management. If the presence of one or more impairment indicators as described above is identified on an evaluation date or at any point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered impaired when the estimated future undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes certain complex or subjective assumptions that include, but are not limited to: •projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, competitive positioning and property location; •estimated holding period or various potential holding periods when considering probability-weighted scenarios; •projected capital expenditures and lease origination costs; •estimated interest and internal costs expected to be capitalized; •projected cash flows from the anticipated or eventual disposition of an operating property; •comparable selling prices; and •property-specific capitalization rates and discount rates. To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value. For the year ended December 31, 2022, no impairment charge was recorded, and for the period from the Effective Date to December 31, 2021, the Trust recorded an impairment charge of $1,951. Investment Properties Held for Sale In determining whether to classify an investment property as held for sale, the Trust considers whether (i) management has committed to a plan to sell the investment property, (ii) the investment property is available for immediate sale in its present condition, subject only to terms that are usual and customary, (iii) the Trust has a legally enforceable contract that has been executed and the buyer's due diligence period, if any, has expired, and (iv) actions required for the Trust to complete the plan indicate that it is unlikely that any significant changes will be made. If all of the above criteria are met, the Trust classifies the investment property as held for sale. When these criteria are met, the Trust (i) suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization of in-place lease intangibles and any above or below market lease intangibles and (ii) records the investment property held for sale at the lower of carrying value or estimated fair value. The assets and liabilities associated with investment properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period. Cash and Cash Equivalents The Trust maintains its cash and cash equivalents at major financial institutions. At December 31, 2022, cash equivalents consisted of investments in money market instruments. Cash and cash equivalents totaled $48,922 and $627,522 as of December 31, 2022 and 2021, respectively. The cash and cash equivalents balance at one or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The Trust periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is remote. Lease Income and Accounts Receivable The Trust accounts for leases under the provisions of ASC 842. The Trust commenced recognition of lease income on its Master Leases (as discussed in Note 4) as of the Effective Date. In most cases, revenue recognition under a lease begins when the lessee takes possession or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. Lease income for leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over the term of each lease. The difference between such lease income earned and the cash rent due under the provisions of a lease is recorded as straight-line rent receivable or payable and is included as a component of “Accounts receivable” in the accompanying consolidated balance sheets. At lease commencement, the Trust estimated that collectibility was probable for the Master Leases due to the creditworthiness analysis performed. Throughout the lease term, individual leases are assessed for collectibility and upon the determination that the collection of rents over the remaining lease life is not probable, lease income is adjusted such that it is recognized on the cash basis of accounting. The Trust will remove the cash basis designation and resume recording lease income from such tenants on an accrual basis when the Trust believes that the collection of rent over the remaining lease term is probable and, generally, based upon a demonstrated payment history. As of December 31, 2022, lease income is being accounted for on the accrual basis of accounting. Lease payments of $8,555, which were received in advance under the terms of the Master Leases are included in “Other liabilities” in the accompanying consolidated balance sheets and recognized as lease income in January 2023. As of December 31, 2021, lease payments of $9,320 were received in advance under the terms of the Master Leases are included in “Other liabilities” in the accompanying consolidated balance sheets and recognized as lease income in January 2022. The Trust records all changes in uncollectible lease income as an adjustment to “Lease income” in the accompanying consolidated statements of operations. During the Reporting Periods, there was no uncollectible lease income. Right-of-use Lease Assets and Lease Liabilities The Trust was assigned an interest as lessee of land under 23 non-cancellable ground leases with third party landlords which were classified as operating leases on the Effective Date. As of December 31, 2022, the Trust held an interest as lessee of land under 21 non-cancellable ground leases. Rental expense associated with land that the Trust leases under non-cancellable operating leases is recorded on a straight-line basis over the term of each lease. In accordance with the Master Lease, rental expense associated with land is paid directly by New JCP and is included in “Lease income” in the accompanying consolidated statements of operations (see Note 4). On the Effective Date, the Trust recognized ROU lease assets and lease liabilities for long-term ground leases. The lease liability is calculated by discounting future lease payments by the Trust’s incremental borrowing rate, which is determined through consideration of (i) the Trust’s entity-specific risk premium, (ii) observable market interest rates and (iii) lease term. The ROU asset is initially measured as the same amount as the lease liability and presented net of the Trust’s existing straight-line ground rent liabilities and ground lease intangible liability. The lease liability is amortized based on changes in the value of discounted future lease payments and the ROU asset is amortized by the difference in the straight-line lease expense for the period and the change in value of the lease liability. The Trust does not include option terms in its future lease payments where they are not reasonably certain to be exercised, however all options terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease. The Trust has elected not to separate lease and non-lease components for operating leases. Income Taxes The Trust is intended to qualify as a liquidating trust within the meaning of United States Treasury Regulation Section 301.7701-4(d) or, in the event it is not so treated, a partnership other than a partnership taxable as a corporation under Section 7704 of the Internal Revenue Code of 1986, as amended. The Trust records a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax position meets a “more likely than not” recognition threshold. All tax returns remain subject to examination by federal and various state tax jurisdictions. As of December 31, 2022 and 2021, there were no uncertain tax positions and the balance of unrecognized tax benefits was $0. Segment Reporting The Trust’s chief operating decision makers, which are comprised of its Principal Executive Officer and Principal Financial Officer, assess and measure the operating results of the Trust’s portfolio of properties based on net operating income and do not differentiate properties by geography, market, size or type. Each of the Trust’s investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, operating results are individually reviewed and discrete financial information is available. However, the Trust’s properties are aggregated into one reportable segment because (i) the properties have similar economic characteristics, (ii) the Trust provides similar services to its tenants and (iii) the Trust’s chief operating decision makers evaluate the collective performance of its properties.
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INVESTMENT PROPERTIES |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT PROPERTIES | INVESTMENT PROPERTIES As of the Effective Date, the Trust obtained control of a real estate portfolio that consisted of 160 Retail Properties and six Warehouses located across 37 U.S. states and Puerto Rico. The following table summarizes the recorded fair value by property type as of the Effective Date:
As of the Effective Date, the weighted average amortization period for lease intangible assets and lease intangible liabilities was 19.9 years. As of December 31, 2022, the Trust's real estate portfolio consisted of 133 Retail Properties across 36 U.S. states and Puerto Rico. The following table presents the amortization during the next five years and thereafter related to the lease intangible assets and liabilities for properties owned as of December 31, 2022:
(a) Represents the portion of the leases in which the Trust is the lessor. The amortization of above and below market lease intangibles is recorded as an adjustment to lease income and the amortization of in-place lease intangibles is recorded to depreciation and amortization expense. (b) Lease intangible assets, net and lease intangible liabilities, net are presented net of $24,334 and $10,853 of accumulated amortization, respectively, as of December 31, 2022. Lease intangible assets, net and lease intangible liabilities, net are presented net of $12,283 and $6,116 of accumulated amortization, respectively, as of December 31, 2021. As of the December 31, 2022 and 2021, the weighted average amortization period for lease intangible assets and lease intangible liabilities was 18.0 years and 19.0 years, respectively. For the year ended December 31, 2022 and for the period from the Effective Date to December 31, 2021, amortization expense pertaining to in-place lease intangibles was $5,227 and $6,397, respectively. For the year ended December 31, 2022 and for the period from the Effective Date to December 31, 2021, amortization pertaining to above market lease intangibles of $7,975 and $7,637, respectively, was recorded as a reduction to “Lease income” in the accompanying consolidated statements of operations. For the year ended December 31, 2022 and for the period from the Effective Date to December 31, 2021, amortization pertaining to below market lease intangibles of $6,284 and $7,232 , was recorded as an increase to “Lease income” in the accompanying consolidated statements of operations. Dispositions The following table summarizes dispositions for the year ended December 31, 2022:
(a) Portfolio comprised of five Retail Properties located in Annapolis, MD, Springfield, VA, Fairfax, VA, Newark, DE and Columbia, MD. The following table summarizes dispositions for the period from the Effective Date to December 31, 2021:
(a) Portfolio comprised of three Retail Properties located in Fairview, TX, Flower Mound, TX, and Round Rock, TX. (b) Portfolio comprised of six Warehouses located in Statesville, NC, Columbus, OH, Lenexa, KS, Reno, NV, Haslet, TX, and Atlanta, GA. (c) Prior to disposition, these Properties were remeasured to fair value and a provision for impairment of $1,951 was recognized (See Note 5). The dispositions completed during the year ended December 31, 2022 and the period from the Effective Date to December 31, 2021 did not qualify for discontinued operations treatment. Investment Properties Held for Sale There were no properties classified as held for sale as of December 31, 2022. One Retail Property located in Culver City, CA was classified as held for sale as of December 31, 2021, with a carrying value of $17,091. On January 6, 2022, the Trust sold this Retail Property for a gross sales price of $22,000. Real estate held for sale consisted of the following at December 31, 2021:
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES Leases as Lessor The Retail Properties are leased pursuant to a single retail master lease (as amended, modified or supplemented from time to time, the “Retail Master Lease”) and the Warehouses were leased pursuant to a single distribution center master lease (as amended, modified or supplemented from time to time, the “DC Master Lease”; together with the Retail Master Lease, the “Master Leases” and individually, each a “Master Lease”). On the Effective Date, New JCP assigned all of its right, title and interest as lessor under the Master Leases to the applicable PropCo. Each of the Master Leases has an initial term of 20 years that commenced on December 7, 2020 and is classified as an operating lease. The Trust receives monthly base rent pursuant to the Master Leases, which was 50% abated through December 31, 2021 for each of the Retail Properties. At the beginning of the third lease year, base rent under the Retail Master Lease increases based on changes in the consumer price index (subject to a maximum 2% increase per year) and the increase is not included in fixed lease payments or the future undiscounted lease payments schedule. Upon the sale of the Warehouses in December 2021, the Trust assigned all of its right, title and interest as lessor in the DC Master Lease to the purchaser. The Master Lease requires direct payment of all operating expenses, real estate taxes, ground lease payments (where applicable), capital expenditures and common area maintenance costs by New JCP and allows for lessor reimbursement if amounts are not directly paid. Expenses paid directly by New JCP are not included in the accompanying consolidated statement of operations, except for ground lease payments made by New JCP, since recording cash payments made by New JCP is necessary to relieve amounts due to the ground lessor included in the ground lease liabilities. Ground lease payments made by New JCP of $4,015 and $3,717 for the year ended December 31, 2022 and for the period from the Effective Date to December 31, 2021, respectively, were paid directly to the ground lessor by New JCP and were included in “Lease income” in the accompanying consolidated statements of operations. In certain municipalities, the Trust is required to remit sales and use taxes to governmental authorities based upon the rental income received from Properties. These taxes are required to be reimbursed by New JCP to the Trust in accordance with the terms of the Master Lease, and are presented net of reimbursement from New JCP on the consolidated statements of operations. For the year ended December 31, 2022, the Trust incurred sales and use taxes of $747 due to governmental authorities, all of which has been reimbursed by New JCP. From the Effective Date to December 31, 2021, the Trust incurred sales and use taxes of $347 due to governmental authorities, all of which has been reimbursed by New JCP. From time to time the Trust may have leasing activity with replacement tenants other than New JCP, but has had none to date. Lease income related to the Trust’s operating leases is comprised of the following:
(a)Base rent consists of fixed lease payments, subject to a 50% rent abatement during the first lease year for each of the Retail Properties. (b)Represents lease income related to the excess of straight-line rental income over fixed lease payments. (c)Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases. (d)Represents above and below market lease amortization recognized straight line over the lease term. (e)Lease income for the period from the Effective Date to December 31, 2021 includes the Retail Property classified as held for sale. As of December 31, 2022, undiscounted lease payments to be received under operating leases for the next five years and thereafter are as follows:
The weighted average remaining lease terms range was approximately 18.0 years as of December 31, 2022. Leases as Lessee The Trust leases land under operating ground leases at certain of its Properties, which expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised. All options terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease. Ground lease rent expense was $6,160 for the year ended December 31, 2022 and $5,782 for the period from the Effective Date to December 31, 2021, which are included within “Operating expenses” in the accompanying consolidated statements of operations. For the year ended December 31, 2022, ground lease rent expense includes interest expense of $4,137, amortization pertaining to right-of-use assets of $1,025, amortization pertaining to above market ground lease intangibles of $(641) and amortization pertaining to below market ground lease intangibles of $1,639. For the period from the Effective Date to December 31, 2021, ground lease rent expense includes interest expense of $3,810, amortization pertaining to right-of-use assets of $950, amortization pertaining to above market ground lease intangibles of $(587) and amortization pertaining to below market ground lease intangibles of $1,609. There were no cash payments for ground lease rent expense as these payments are made by the tenant. As of December 31, 2022, undiscounted future rental obligations to be paid under the long-term ground leases by New JCP under the terms of the Master Lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows:
The Trust’s long-term ground leases had a weighted average remaining lease term of 44.4 years and a weighted average discount rate of 11.0% as of December 31, 2022.
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LEASES | LEASES Leases as Lessor The Retail Properties are leased pursuant to a single retail master lease (as amended, modified or supplemented from time to time, the “Retail Master Lease”) and the Warehouses were leased pursuant to a single distribution center master lease (as amended, modified or supplemented from time to time, the “DC Master Lease”; together with the Retail Master Lease, the “Master Leases” and individually, each a “Master Lease”). On the Effective Date, New JCP assigned all of its right, title and interest as lessor under the Master Leases to the applicable PropCo. Each of the Master Leases has an initial term of 20 years that commenced on December 7, 2020 and is classified as an operating lease. The Trust receives monthly base rent pursuant to the Master Leases, which was 50% abated through December 31, 2021 for each of the Retail Properties. At the beginning of the third lease year, base rent under the Retail Master Lease increases based on changes in the consumer price index (subject to a maximum 2% increase per year) and the increase is not included in fixed lease payments or the future undiscounted lease payments schedule. Upon the sale of the Warehouses in December 2021, the Trust assigned all of its right, title and interest as lessor in the DC Master Lease to the purchaser. The Master Lease requires direct payment of all operating expenses, real estate taxes, ground lease payments (where applicable), capital expenditures and common area maintenance costs by New JCP and allows for lessor reimbursement if amounts are not directly paid. Expenses paid directly by New JCP are not included in the accompanying consolidated statement of operations, except for ground lease payments made by New JCP, since recording cash payments made by New JCP is necessary to relieve amounts due to the ground lessor included in the ground lease liabilities. Ground lease payments made by New JCP of $4,015 and $3,717 for the year ended December 31, 2022 and for the period from the Effective Date to December 31, 2021, respectively, were paid directly to the ground lessor by New JCP and were included in “Lease income” in the accompanying consolidated statements of operations. In certain municipalities, the Trust is required to remit sales and use taxes to governmental authorities based upon the rental income received from Properties. These taxes are required to be reimbursed by New JCP to the Trust in accordance with the terms of the Master Lease, and are presented net of reimbursement from New JCP on the consolidated statements of operations. For the year ended December 31, 2022, the Trust incurred sales and use taxes of $747 due to governmental authorities, all of which has been reimbursed by New JCP. From the Effective Date to December 31, 2021, the Trust incurred sales and use taxes of $347 due to governmental authorities, all of which has been reimbursed by New JCP. From time to time the Trust may have leasing activity with replacement tenants other than New JCP, but has had none to date. Lease income related to the Trust’s operating leases is comprised of the following:
(a)Base rent consists of fixed lease payments, subject to a 50% rent abatement during the first lease year for each of the Retail Properties. (b)Represents lease income related to the excess of straight-line rental income over fixed lease payments. (c)Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases. (d)Represents above and below market lease amortization recognized straight line over the lease term. (e)Lease income for the period from the Effective Date to December 31, 2021 includes the Retail Property classified as held for sale. As of December 31, 2022, undiscounted lease payments to be received under operating leases for the next five years and thereafter are as follows:
The weighted average remaining lease terms range was approximately 18.0 years as of December 31, 2022. Leases as Lessee The Trust leases land under operating ground leases at certain of its Properties, which expire in various years from 2038 to 2096, including any available option periods that are reasonably certain to be exercised. All options terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease. Ground lease rent expense was $6,160 for the year ended December 31, 2022 and $5,782 for the period from the Effective Date to December 31, 2021, which are included within “Operating expenses” in the accompanying consolidated statements of operations. For the year ended December 31, 2022, ground lease rent expense includes interest expense of $4,137, amortization pertaining to right-of-use assets of $1,025, amortization pertaining to above market ground lease intangibles of $(641) and amortization pertaining to below market ground lease intangibles of $1,639. For the period from the Effective Date to December 31, 2021, ground lease rent expense includes interest expense of $3,810, amortization pertaining to right-of-use assets of $950, amortization pertaining to above market ground lease intangibles of $(587) and amortization pertaining to below market ground lease intangibles of $1,609. There were no cash payments for ground lease rent expense as these payments are made by the tenant. As of December 31, 2022, undiscounted future rental obligations to be paid under the long-term ground leases by New JCP under the terms of the Master Lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows:
The Trust’s long-term ground leases had a weighted average remaining lease term of 44.4 years and a weighted average discount rate of 11.0% as of December 31, 2022.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair Value Hierarchy A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows: •Level 1: Quoted prices in active markets for identical securities. •Level 2: Prices determined using other significant observable inputs. Observable inputs that other market participants would use in pricing a security, including quoted prices for similar securities. •Level 3: Prices determined using significant unobservable inputs. Unobservable inputs reflect the Trust’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available in the circumstances. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, to the extent the underlying liability will be settled in cash, approximate their carrying values because of the short-term nature of these instruments. Recurring Fair Value Measurements As of December 31, 2022 and 2021, the Trust did not hold any assets or liabilities that are measured at fair value on a recurring basis. Nonrecurring Fair Value Measurements For the year ended December 31, 2022, the Trust did not remeasure any assets to fair value on a nonrecurring basis, and no impairment charges were recorded. From the Effective Date to December 31, 2021, the Trust remeasured two investment properties to fair value on a nonrecurring basis and recognized a provision for impairment of investment properties of $1,951 related to two Retail Properties that were classified as held for sale during the period from the Effective Date to December 31, 2021. The following table summarizes the provision for impairment of investment properties from the Effective Date to December 31, 2021:
(a) Estimated fair value is based on actual aggregate sales proceeds net of closing costs, based on actual transactions with unrelated third parties. The Trust determined that its valuation of these investments were classified within Level 3 of the fair value hierarchy.
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COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Master Leases Landlord Option Properties: The Retail Master Lease provides the Trust an option on 23 of the Retail Properties allowing current or future landlords to terminate the Retail Master Lease as to that property upon 24 months’ prior written notice but such option is (for the Trust, but not for future landlords) limited to eight Retail Properties in any lease year. The DC Master Lease provided the Trust an option on all six of the distribution centers, allowing current or future landlords to terminate the DC Master Lease upon 24 months’ prior written notice if the tenant has ceased operations within the premises. During 2022, the Trust sold nine Retail Properties with a landlord termination option, and during 2021, the Trust sold seven Retail Properties and all six Warehouses with landlord termination options. As of December 31, 2022, there were seven remaining Retail Properties with landlord termination options. Tenant Option Properties: The Retail Master Lease provides New JCP an option to terminate the Retail Master Lease upon 24 months’ prior written notice as to all or a portion of any one or more of six specified properties but such option is limited to no more than five Properties in any lease year. During 2022, the Trust sold one Retail Property with a tenant termination option and during 2021, the Trust sold four Retail Properties with tenant termination options. As of December 31, 2022, there was one remaining Retail Property with a tenant termination option. Substitution Options and Go Dark Rights: The Retail Master Lease provides New JCP an option to terminate the Retail Master Lease with respect to selected sub-performing properties upon replacement of such sub-performing properties with a qualified replacement property in accordance with the terms and conditions of the Retail Master Lease. Notwithstanding the foregoing, New JCP shall only be entitled to exercise a substitution option (i) between the third and 15th anniversary of the commencement date of the Retail Master Lease and (ii) if the aggregate allocated base rent amounts for all Go Dark/Substitution Properties (as defined in the Retail Master Lease) during the applicable period (as described in the Retail Master Lease) is less than or equal to 15% of the aggregate first year’s base rent. The Retail Master Lease also provides New JCP with the limited right to “go dark” (i.e., cease operations) at one or more Retail Properties in certain limited circumstances as set forth in the Retail Master Lease; provided that such right does not relieve New JCP of its obligation to make any rent payments that are due and owing. Tenant Purchase Rights: The Master Leases contain preferential offer rights in favor of New JCP with respect to 70 of the Retail Properties and each of the Warehouses (the “Tenant Purchase Rights”), which enable New JCP, in connection with a potential sale of such Properties, to acquire such Properties for a price determined in accordance with the procedures set forth in the Master Leases. These Tenant Purchase Rights require the Trust to reoffer a property to the tenant in the event it is not sold within a specified period of time at a specified minimum price related to the preferential purchase price. 18 of these Retail Properties, of which three were purchased by an affiliate of the tenant, and all of the Warehouses, of which none were purchased by the tenant, have been sold as of December 31, 2022. Lockout Periods: The Trust agreed not to deliver notice to New JCP formally commencing the sales process at those Properties subject to the Tenant Purchase Rights prior to the dates specified in the applicable Master Lease for such Properties. All lockout periods with respect to the Tenant Purchase Rights for the 70 Retail Properties have expired. Environmental Matters Federal law (and the laws of some states in which we own or may acquire properties) imposes liability on a landowner for the presence on the premises of hazardous substances or wastes (as defined by present and future federal and state laws and regulations). This liability is without regard to fault or knowledge of the presence of such substances and may be imposed jointly and severally upon all succeeding landowners. If such hazardous substance is discovered on a property owned by us, we could incur liability for the removal of the substances and the cleanup of the property. There can be no assurance that we would have effective remedies against prior owners of the property. In addition, we may be liable to current or future tenants and may find it difficult or impossible to sell the property either prior to or following such a cleanup. There are no environmental matters that are expected to have a material effect on the Trust’s consolidated financial statements. Risk of Uninsured Property Losses The Trust maintains property damage, fire loss, environmental, and liability insurance in addition to the insurance required to be maintained by the Tenant pursuant to the Master Leases. However, there are certain types of losses (generally of a catastrophic nature) which may be either uninsurable or not economically insurable. Such excluded risks may include war, earthquakes, tornados, floods and certain other environmental hazards. Should such events occur, (i) we may suffer a loss of capital invested, (ii) tenant may suffer losses and may be unable to pay rent for the spaces, and (iii) we may suffer a loss of profits which might be anticipated from one or more properties. Impacts of Macroeconomic Factors Our operating results have been and will continue to be impacted by global and national economic and market conditions generally and by the local economic conditions where our properties are located. Global economic challenges, including the war in Ukraine have contributed to rising interest rates, high inflation, ongoing geopolitical tensions and instability and volatility in the global markets which, in turn, may have adverse effects on the world and U.S. economies and lead to a downturn in consumer confidence and spending. Rising interest rates may also negatively impact the prices that buyers will be willing to pay for our properties. If we or New JCP were to experience adverse economic trends and/or if our or New JCP’s efforts to counteract the impacts of these trends are not sufficiently effective, there could be a negative impact on our financial performance and position in future fiscal periods. Concentration of Credit Risk As of December 31, 2022 and 2021, all of the Properties were leased to New JCP, and all of the Trust’s lease income was derived from the Master Leases (see Note 4). The Properties' tenants constitute a significant asset concentration, as all tenants are subsidiaries of New JCP and New JCP provides financial guarantees with respect to the Master Leases. Until the Trust materially diversifies the composition of tenants for its properties, an event that has a material adverse effect on New JCP’s business, financial condition or results of operations could have a material adverse effect on the Trust’s business, financial condition or results of operations. The Trust's real estate portfolio was reasonably diversified by geographical location and did not contain any other significant concentrations of credit risk. As of December 31, 2022, the Trust's properties are located across 36 U.S. states and Puerto Rico. For the year ended December 31, 2022 , the Trust's lease income was concentrated in two states as follows: California 18.6% and Texas 13.9%. From the Effective Date to December 31, 2021, the Trust's lease income was concentrated in two states as follows: California 14.8% and Texas 14.4%. Litigation From time to time, the Trust may be subject to various legal proceedings and claims that arise in the ordinary course of business. There are no current matters that are expected to have a material effect on the Trust’s consolidated financial statements.
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SUBSEQUENT EVENTS |
12 Months Ended |
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Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSSubsequent to December 31, 2022, we paid monthly distributions to Certificateholders of $22,944 or $0.31 per certificate in January 2023 and $6,325 or $0.08 per certificate in February 2023. On March 7, 2023, we announced a distribution of $8,002 or $0.11 per certificate to be paid on March 10, 2023 to Certificateholders. |
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION |
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SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION |
(a) We have prepared Schedule III – Real Estate and Accumulated Depreciation (“Schedule III”) omitting certain of the required information articulated in Securities and Exchange Commission Rule 12-28 in Regulation S-X. Rule 12-28 requires property specific information for the date of construction; these disclosures have been omitted from Schedule III. We are unable to provide this disclosure as many of the Properties were constructed prior to when Old Copper’s fixed asset accounting software was implemented, and thus we do not have the requisite historical records readily available. (b) The aggregate cost of land, buildings and improvements for federal income tax purposes is approximately $920 million. (c) Depreciation is computed based on the following estimated useful lives: Buildings and Improvements 19-43 years Reconciliation of investment properties:
Reconciliation of accumulated depreciation:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the rules and regulations of the U.S. Securities and Exchange Commission (SEC). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. For example, significant estimates, judgments and assumptions were required in a number of areas, including, but not limited to, estimating the fair value of the investment properties as of the Effective Date, determining the useful lives of real estate properties, determination of the incremental borrowing rate in ground leases, reasonably certain lease terms for ground and master leases, and evaluating the impairment of long-lived assets. The accompanying consolidated financial statements include the accounts of the Trust, as well as all wholly owned subsidiaries of the Trust. All intercompany balances and transactions have been eliminated in consolidation. Wholly owned subsidiaries consist of limited liability companies and limited partnerships. The Trust has evaluated the fee arrangements with the Trustee and Manager to determine if they represent a variable interest, and concluded that the fee arrangements do not create a variable interest. The accompanying consolidated financial statements include the year ended December 31, 2022 and the period from the Effective Date to December 31, 2021 (the “Reporting Periods”).
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Fresh Start Accounting and Investment Properties, Impairment of Investment Properties and Investment Properties Held for Sale | Fresh Start Accounting and Investment Properties The Trust determined the fresh start accounting fair value of the investment properties based upon the fair value of the individual assets and liabilities assumed as of the Effective Date, which generally included (i) land and land improvements, (ii) building and other improvements, (iii) in-place lease intangibles, (iv) above and below market lease intangibles and (v) leasehold right-of-use assets and related operating lease liabilities. In estimating the fair value of tangible assets, including land and improvements, building and other improvements for fresh start accounting, as of the Effective Date, the Trust considered available comparable market and industry information. The Trust allocated a portion of the fair value to the estimated in-place lease intangibles based on estimated lease execution costs for similar leases as well as lost rental payments during an assumed lease-up period. The Trust also evaluated each lease as compared to current market rates. If a lease was determined to be above or below market, the Trust allocated a portion of the fair value to such above or below market leases based upon the present value of the difference between the contractual lease payments and estimated market rent payments over the remaining lease term. Renewal periods were included within the lease term in the calculation of above and below market lease values if, based upon factors known at the Effective Date, the Trust concluded that market participants would consider it reasonably certain that the lessee would exercise such options. Fair value estimates used in fresh start accounting, including the capitalization rates and discount rate used, required the Trust to consider various factors, including, but not limited to, market knowledge, demographics, age and physical condition of the property, geographic location, size and location of tenant spaces within the investment properties, and tenant profile. The portion of the fair value allocated to in-place lease intangibles is amortized on a straight-line basis over the life of the related lease as a component of depreciation and amortization expense. With respect to leases in which the Trust is the lessor, the portion of fair value allocated to above and below market lease intangibles is amortized on a straight-line basis over the life of the related lease as an adjustment to lease income. With respect to ground leases (in which the Trust is the lessee), a lease liability is measured at the present value of the remaining lease payments and the right-of-use lease (ROU) asset is initially measured as the same amount as the lease liability and adjusted for any above or below market ground lease intangibles. All options terms were assumed to be exercised through the initial term of the Master Lease. On the Effective Date, the Trust assumed a liability of $8,651 related to transaction costs. Such costs were required to be incurred in order for the emergence from bankruptcy to take place, and are therefore considered pre-emergence costs (costs incurred prior to the change in control). This assumed liability decreased the net assets of the Trust by $8,651 as of the Effective Date. Ordinary repairs and maintenance will be expensed as incurred. Expenditures for significant improvements will be capitalized. Depreciation expense is computed using the straight-line method. Building and other improvements are depreciated based upon estimated useful lives which range from 19 to 43 years for building and other improvements. Tenant improvements not considered a component of the building are amortized on a straight-line basis over the lesser of the estimated remaining useful life of the asset or the term of the lease. Impairment of Investment Properties The Trust’s investment properties are reviewed for potential impairment at the end of each reporting period or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. At such evaluation date, the Trust separately determines whether impairment indicators exist for each property. Examples of situations considered to be impairment indicators include, but are not limited to: •a significant change in the credit quality of tenant; •a reduction in anticipated holding period; •a significant decrease in market price; and •any other quantitative or qualitative events or factors deemed significant by the Trust’s management. If the presence of one or more impairment indicators as described above is identified on an evaluation date or at any point throughout the year with respect to a property, the asset is tested for recoverability by comparing its carrying value to the estimated future undiscounted cash flows. An investment property is considered impaired when the estimated future undiscounted cash flows are less than its current carrying value. When performing a test for recoverability or estimating the fair value of an impaired investment property, the Trust makes certain complex or subjective assumptions that include, but are not limited to: •projected operating cash flows considering factors such as vacancy rates, rental rates, lease terms, tenant financial strength, competitive positioning and property location; •estimated holding period or various potential holding periods when considering probability-weighted scenarios; •projected capital expenditures and lease origination costs; •estimated interest and internal costs expected to be capitalized; •projected cash flows from the anticipated or eventual disposition of an operating property; •comparable selling prices; and •property-specific capitalization rates and discount rates. To the extent impairment has occurred, the Trust will record an impairment charge calculated as the excess of the carrying value of the asset over its estimated fair value. For the year ended December 31, 2022, no impairment charge was recorded, and for the period from the Effective Date to December 31, 2021, the Trust recorded an impairment charge of $1,951. Investment Properties Held for Sale In determining whether to classify an investment property as held for sale, the Trust considers whether (i) management has committed to a plan to sell the investment property, (ii) the investment property is available for immediate sale in its present condition, subject only to terms that are usual and customary, (iii) the Trust has a legally enforceable contract that has been executed and the buyer's due diligence period, if any, has expired, and (iv) actions required for the Trust to complete the plan indicate that it is unlikely that any significant changes will be made. If all of the above criteria are met, the Trust classifies the investment property as held for sale. When these criteria are met, the Trust (i) suspends depreciation (including depreciation for tenant improvements and building improvements) and amortization of in-place lease intangibles and any above or below market lease intangibles and (ii) records the investment property held for sale at the lower of carrying value or estimated fair value. The assets and liabilities associated with investment properties that are classified as held for sale are presented separately on the consolidated balance sheets for the most recent reporting period.
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Cash and Cash Equivalents | Cash and Cash Equivalents The Trust maintains its cash and cash equivalents at major financial institutions. At December 31, 2022, cash equivalents consisted of investments in money market instruments. Cash and cash equivalents totaled $48,922 and $627,522 as of December 31, 2022 and 2021, respectively. The cash and cash equivalents balance at one or more of these financial institutions exceeds the Federal Depository Insurance Corporation (FDIC) insurance coverage. The Trust periodically assesses the credit risk associated with these financial institutions and believes that the risk of loss is remote.
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Lease Income and Accounts Receivable | Lease Income and Accounts Receivable The Trust accounts for leases under the provisions of ASC 842. The Trust commenced recognition of lease income on its Master Leases (as discussed in Note 4) as of the Effective Date. In most cases, revenue recognition under a lease begins when the lessee takes possession or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. Lease income for leases that have fixed and measurable rent escalations, is recognized on a straight-line basis over the term of each lease. The difference between such lease income earned and the cash rent due under the provisions of a lease is recorded as straight-line rent receivable or payable and is included as a component of “Accounts receivable” in the accompanying consolidated balance sheets. At lease commencement, the Trust estimated that collectibility was probable for the Master Leases due to the creditworthiness analysis performed. Throughout the lease term, individual leases are assessed for collectibility and upon the determination that the collection of rents over the remaining lease life is not probable, lease income is adjusted such that it is recognized on the cash basis of accounting. The Trust will remove the cash basis designation and resume recording lease income from such tenants on an accrual basis when the Trust believes that the collection of rent over the remaining lease term is probable and, generally, based upon a demonstrated payment history. As of December 31, 2022, lease income is being accounted for on the accrual basis of accounting. Lease payments of $8,555, which were received in advance under the terms of the Master Leases are included in “Other liabilities” in the accompanying consolidated balance sheets and recognized as lease income in January 2023. As of December 31, 2021, lease payments of $9,320 were received in advance under the terms of the Master Leases are included in “Other liabilities” in the accompanying consolidated balance sheets and recognized as lease income in January 2022. The Trust records all changes in uncollectible lease income as an adjustment to “Lease income” in the accompanying consolidated statements of operations. During the Reporting Periods, there was no uncollectible lease income.
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Right-of-use Lease Assets and Lease Liabilities | Right-of-use Lease Assets and Lease Liabilities The Trust was assigned an interest as lessee of land under 23 non-cancellable ground leases with third party landlords which were classified as operating leases on the Effective Date. As of December 31, 2022, the Trust held an interest as lessee of land under 21 non-cancellable ground leases. Rental expense associated with land that the Trust leases under non-cancellable operating leases is recorded on a straight-line basis over the term of each lease. In accordance with the Master Lease, rental expense associated with land is paid directly by New JCP and is included in “Lease income” in the accompanying consolidated statements of operations (see Note 4). On the Effective Date, the Trust recognized ROU lease assets and lease liabilities for long-term ground leases. The lease liability is calculated by discounting future lease payments by the Trust’s incremental borrowing rate, which is determined through consideration of (i) the Trust’s entity-specific risk premium, (ii) observable market interest rates and (iii) lease term. The ROU asset is initially measured as the same amount as the lease liability and presented net of the Trust’s existing straight-line ground rent liabilities and ground lease intangible liability. The lease liability is amortized based on changes in the value of discounted future lease payments and the ROU asset is amortized by the difference in the straight-line lease expense for the period and the change in value of the lease liability. The Trust does not include option terms in its future lease payments where they are not reasonably certain to be exercised, however all options terms were considered to be reasonably certain of being exercised through the initial term of the Master Lease. The Trust has elected not to separate lease and non-lease components for operating leases.
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Income Taxes | Income Taxes The Trust is intended to qualify as a liquidating trust within the meaning of United States Treasury Regulation Section 301.7701-4(d) or, in the event it is not so treated, a partnership other than a partnership taxable as a corporation under Section 7704 of the Internal Revenue Code of 1986, as amended. The Trust records a benefit, based on the GAAP measurement criteria, for uncertain income tax positions if the result of a tax position meets a “more likely than not” recognition threshold. All tax returns remain subject to examination by federal and various state tax jurisdictions. As of December 31, 2022 and 2021, there were no uncertain tax positions and the balance of unrecognized tax benefits was $0.
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Segment Reporting | Segment Reporting The Trust’s chief operating decision makers, which are comprised of its Principal Executive Officer and Principal Financial Officer, assess and measure the operating results of the Trust’s portfolio of properties based on net operating income and do not differentiate properties by geography, market, size or type. Each of the Trust’s investment properties is considered a separate operating segment, as each property earns revenue and incurs expenses, operating results are individually reviewed and discrete financial information is available. However, the Trust’s properties are aggregated into one reportable segment because (i) the properties have similar economic characteristics, (ii) the Trust provides similar services to its tenants and (iii) the Trust’s chief operating decision makers evaluate the collective performance of its properties.
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INVESTMENT PROPERTIES (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition price by property type | The following table summarizes the recorded fair value by property type as of the Effective Date:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization related to the acquired lease intangible assets and liabilities | The following table presents the amortization during the next five years and thereafter related to the lease intangible assets and liabilities for properties owned as of December 31, 2022:
(a) Represents the portion of the leases in which the Trust is the lessor. The amortization of above and below market lease intangibles is recorded as an adjustment to lease income and the amortization of in-place lease intangibles is recorded to depreciation and amortization expense. (b) Lease intangible assets, net and lease intangible liabilities, net are presented net of $24,334 and $10,853 of accumulated amortization, respectively, as of December 31, 2022. Lease intangible assets, net and lease intangible liabilities, net are presented net of $12,283 and $6,116 of accumulated amortization, respectively, as of December 31, 2021.
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Dispositions and Held for Sale | The following table summarizes dispositions for the year ended December 31, 2022:
(a) Portfolio comprised of five Retail Properties located in Annapolis, MD, Springfield, VA, Fairfax, VA, Newark, DE and Columbia, MD. The following table summarizes dispositions for the period from the Effective Date to December 31, 2021:
(a) Portfolio comprised of three Retail Properties located in Fairview, TX, Flower Mound, TX, and Round Rock, TX. (b) Portfolio comprised of six Warehouses located in Statesville, NC, Columbus, OH, Lenexa, KS, Reno, NV, Haslet, TX, and Atlanta, GA. (c) Prior to disposition, these Properties were remeasured to fair value and a provision for impairment of $1,951 was recognized (See Note 5). There were no properties classified as held for sale as of December 31, 2022. One Retail Property located in Culver City, CA was classified as held for sale as of December 31, 2021, with a carrying value of $17,091. On January 6, 2022, the Trust sold this Retail Property for a gross sales price of $22,000. Real estate held for sale consisted of the following at December 31, 2021:
|
LEASES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease income related to operating leases | Lease income related to the Trust’s operating leases is comprised of the following:
(a)Base rent consists of fixed lease payments, subject to a 50% rent abatement during the first lease year for each of the Retail Properties. (b)Represents lease income related to the excess of straight-line rental income over fixed lease payments. (c)Ground lease reimbursement income consists of lease payments due from the tenant for land leased under non-cancellable operating leases. (d)Represents above and below market lease amortization recognized straight line over the lease term. (e)Lease income for the period from the Effective Date to December 31, 2021 includes the Retail Property classified as held for sale.
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Undiscounted lease payments to be received under operating leases | As of December 31, 2022, undiscounted lease payments to be received under operating leases for the next five years and thereafter are as follows:
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Undiscounted future rental obligations to be paid under long-term ground and office leases | As of December 31, 2022, undiscounted future rental obligations to be paid under the long-term ground leases by New JCP under the terms of the Master Lease on behalf of the Trust, including fixed rental increases, for the next five years and thereafter, are as follows:
|
FAIR VALUE MEASUREMENTS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for impairment | The following table summarizes the provision for impairment of investment properties from the Effective Date to December 31, 2021:
(a) Estimated fair value is based on actual aggregate sales proceeds net of closing costs, based on actual transactions with unrelated third parties. The Trust determined that its valuation of these investments were classified within Level 3 of the fair value hierarchy.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) |
11 Months Ended | 12 Months Ended | |
---|---|---|---|
Jan. 30, 2021
USD ($)
lease
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2022
USD ($)
lease
segment
|
|
Accounting Policies [Abstract] | |||
Transaction costs | $ 8,651,000 | ||
Real Estate Properties [Line Items] | |||
Provision for impairment of investment properties | $ 1,951,000 | $ 0 | |
Cash and cash equivalents | 627,522,000 | 48,922,000 | |
Lease payments received in advance | 9,320,000 | $ 8,555,000 | |
Number of lease contracts | lease | 23 | 21 | |
Unrecognized tax benefits | $ 0 | $ 0 | |
Number of reportable segments | segment | 1 | ||
Minimum | Building and associated improvements | |||
Real Estate Properties [Line Items] | |||
Estimated useful lives | 19 years | ||
Maximum | Building and associated improvements | |||
Real Estate Properties [Line Items] | |||
Estimated useful lives | 43 years |
INVESTMENT PROPERTIES - Allocated Fair Value by Property Type (Details) ft² in Thousands, $ in Thousands |
Dec. 31, 2022
ft²
|
Jan. 30, 2021
USD ($)
ft²
|
---|---|---|
Real Estate Properties [Line Items] | ||
Square Footage (unaudited) | 31,821 | |
Fair Value | $ | $ 1,935,208 | |
Retail | ||
Real Estate Properties [Line Items] | ||
Square Footage (unaudited) | 17,600 | |
Retail | Fee Simple | ||
Real Estate Properties [Line Items] | ||
Square Footage (unaudited) | 18,326 | |
Fair Value | $ | $ 1,234,100 | |
Retail | Ground Leasehold | ||
Real Estate Properties [Line Items] | ||
Square Footage (unaudited) | 3,386 | |
Fair Value | $ | $ 203,208 | |
Warehouse | Fee Simple | ||
Real Estate Properties [Line Items] | ||
Square Footage (unaudited) | 10,109 | |
Fair Value | $ | $ 497,900 |
INVESTMENT PROPERTIES - Amortization (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Acquired lease intangible assets, net | ||
2023 | $ 12,696 | |
2024 | 12,696 | |
2025 | 12,696 | |
2026 | 12,696 | |
2027 | 12,696 | |
Thereafter | 165,049 | |
Total | 228,529 | $ 254,600 |
Acquired below market lease intangibles | ||
2023 | 5,662 | |
2024 | 5,662 | |
2025 | 5,662 | |
2026 | 5,662 | |
2027 | 5,662 | |
Thereafter | 73,610 | |
Total | 101,920 | 126,769 |
Acquired lease intangible assets, net, accumulated amortization | 24,334 | 12,283 |
Acquired lease intangible liabilities, accumulated amortization | 10,853 | $ 6,116 |
Above market lease intangibles | ||
Acquired lease intangible assets, net | ||
2023 | 7,827 | |
2024 | 7,827 | |
2025 | 7,827 | |
2026 | 7,827 | |
2027 | 7,827 | |
Thereafter | 101,748 | |
Total | 140,883 | |
In-place lease value intangibles | ||
Acquired lease intangible assets, net | ||
2023 | 4,869 | |
2024 | 4,869 | |
2025 | 4,869 | |
2026 | 4,869 | |
2027 | 4,869 | |
Thereafter | 63,301 | |
Total | $ 87,646 |
LEASES - Lease Income (Details) - USD ($) $ in Thousands |
11 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2022 |
|
Lease income related to fixed lease payments | ||
Base rent | $ 85,575 | $ 108,569 |
Straight-line rental income, net | 58,037 | (2,498) |
Lease income related to variable lease payments | ||
Ground lease reimbursement income | 3,717 | 4,015 |
Other | ||
Amortization of above and below market lease intangibles | (405) | (1,691) |
Lease income | $ 146,924 | $ 108,395 |
Master lease, percent rent abatement in first year | 50.00% |
LEASES - Undiscounted Lease Payments to be Received (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
|
---|---|
Leases [Abstract] | |
2023 | $ 102,661 |
2024 | 102,661 |
2025 | 102,661 |
2026 | 102,661 |
2027 | 102,661 |
Thereafter | 1,334,595 |
Total | $ 1,847,900 |
LEASES - Undiscounted Future Rental Obligations (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Leases [Abstract] | ||
2023 | $ 4,062 | |
2024 | 4,124 | |
2025 | 4,116 | |
2026 | 4,138 | |
2027 | 4,197 | |
Thereafter | 220,159 | |
Less imputed interest | (203,120) | |
Lease liabilities | $ 37,676 | $ 37,554 |
FAIR VALUE MEASUREMENTS - Additional Information (Details) $ in Thousands |
11 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
property
|
|
Fair Value Disclosures [Abstract] | |||
Provision for impairment of investment properties | $ | $ 1,951 | $ 0 | |
Number of impaired properties | property | 2 |
FAIR VALUE MEASUREMENTS - Provision For Impairment (Details) - USD ($) $ in Thousands |
11 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 23, 2021 |
Jul. 09, 2021 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Provision for Impairment | $ 1,951 | $ 0 | ||
San Diego, CA | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Fair Value | $ 14,553 | |||
Provision for Impairment | 750 | |||
Queens, NY | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Fair Value | $ 38,785 | |||
Provision for Impairment | $ 1,201 |
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Mar. 10, 2023 |
Feb. 28, 2023 |
Jan. 31, 2023 |
|
Subsequent Event [Line Items] | |||
Distribution, per certificate | $ 8,002 | $ 6,325 | $ 22,944 |
Distribution (usd per share) | $ 0.11 | $ 0.08 | $ 0.31 |
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Reconciliations (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate [Roll Forward] | |
Balance at beginning of period | $ 1,045,051 |
Provision for impairment of investment properties | 0 |
Sales of investment properties | (125,503) |
Assets associated with investments held for sale | 0 |
Costs Capitalized Subsequent to Acquisition | 89 |
Balance at end of period | 919,637 |
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate, Accumulated Depreciation [Roll Forward] | |
Balance at beginning of period | 14,808 |
Depreciation expense | 15,465 |
Sales of investment properties | (2,531) |
Accumulated depreciation associated with investments held for sale | 0 |
Balance at end of period | $ 27,742 |
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