Investments in Real Estate (Tables)

6 Months Ended

Jun. 30, 2021

Real Estate Investments, Net [Abstract]

Schedule of acquisitions

Below is a summary of our acquisitions for the six months ended June 30, 2021:

	Number of Properties	Leasable Square Feet	Investment ($ in thousands)		Weighted Average Lease Term (Years)	Initial Average Cash Lease Yield (1)
Six months ended June 30, 2021 (2)
Acquisitions - U.S. (in 29 states)	173	4,484,715	$	1,052,333	13.7	5.5	%
Acquisitions - U.K. (3)	41	3,133,460	994,783		9.8	5.6	%
Total acquisitions	214	7,618,175	$	2,047,116	11.8	5.5	%
Properties under development - U.S.	40	2,015,992	114,798		15.6	5.7	%
Total (4)	254	9,634,167	$	2,161,914	12.0	5.5	%

(1)The initial average cash lease yield for a property is generally computed as estimated contractual first year cash net operating income, which, in the case of a net leased property, is equal to the aggregate cash base rent for the first full year of each lease, divided by the total cost of the property. Since it is possible that a client could default on the payment of contractual rent, we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above. Contractual net operating income used in the calculation of initial average cash yield for the six months ended June 30, 2021 includes approximately $850,000 received as settlement credits for four properties acquired as reimbursement of free rent periods.

In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return. When the lease does not provide for a fixed rate of return on a property under development or expansion, the initial average cash lease yield is computed as follows: estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs.

(2)None of our investments during the six months ended June 30, 2021 caused any one client to be 10% or more of our total assets at June 30, 2021. All of our investments in acquired properties during the six months ended June 30, 2021 are 100% leased at the acquisition date.

(3)Represents investments of £715.1 million Sterling during the six months ended June 30, 2021, converted at the applicable exchange rate on the date of acquisition.

(4)Our clients occupying the new properties operate in 28 industries, and are 75.8% retail and 24.2% industrial, based on rental revenue. Approximately 47% of the rental revenue generated from acquisitions during the six months ended June 30, 2021 is from investment grade rated clients, their subsidiaries or affiliated companies.

Below is a summary of our acquisitions for the six months ended June 30, 2020:

	Number of Properties	Leasable Square Feet	Investment ($ in thousands)		Weighted Average Lease Term (Years)	Initial Average Cash Lease Yield
Six months ended June 30, 2020 (1)
Acquisitions - U.S. (in 25 states)	80	1,851,346	$	412,584	14.4	6.5	%
Acquisitions - U.K. (2)	6	488,310	223,751		11.8	5.3	%
Total acquisitions	86	2,339,656	$	636,335	13.6	6.1	%
Properties under development - U.S.	8	179,662	3,869		10.5	8.8	%
Total (3)	94	2,519,318	$	640,204	13.6	6.1	%

(1)None of our investments during the six months ended June 30, 2020 caused any one client to be 10% or more of our total assets at June 30, 2020. All of our investments in acquired properties during the six months ended June 30, 2020 were 100% leased at the acquisition date.

(2)Represents investments of £180.1 million Sterling during the six months ended June 30, 2020 converted at the applicable exchange rate on the date of the acquisition.

(3) Our clients occupying the new properties operated in 17 industries, and are 96.5% retail and 3.5% industrial, based on rental revenue. Approximately 37% of the rental revenue generated from acquisitions during the six months ended June 30, 2020 was from investment grade rated clients, their subsidiaries or affiliated companies.

Schedule allocation of acquisitions

The acquisitions during the six months ended June 30, 2021, which had no associated contingent consideration, were allocated as follows (amounts in millions):

	Acquisitions - U.S.		Acquisitions - U.K.
Six months ended June 30, 2021	(USD)		(£ Sterling)
Land (1)	$	383.6	£	217.6
Buildings and improvements	538.6		370.6
Lease intangible assets (2)	173.2		132.4
Other assets (3)	38.5		—
Lease intangible liabilities (4)	(14.1)		(5.2)
Other liabilities (5)	(21.5)		(0.3)
	$	1,098.3	£	715.1

(1) U.K. land includes £1.3 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 12.6 years.

(3) U.S. other assets consists of financing receivables with above-market terms and a right-of-use asset accounted for as a finance lease.

(4) The weighted average amortization period for acquired lease intangible liabilities is 14.0 years.

(5) U.S. other liabilities consists entirely of deferred rent on certain below-market leases. U.K. other liabilities consists entirely of a GBP mortgage premium.

The acquisitions during the six months ended June 30, 2020, which had no associated contingent consideration, were allocated as follows (amounts in millions):

	Acquisitions - U.S.		Acquisitions - U.K.
Six months ended June 30, 2020	(USD)		(£ Sterling)
Land (1)	$	85.1	£	22.8
Buildings and improvements	276.4		63.9
Lease intangible assets (2)	54.5		42.8
Other assets (3)	1.5		50.6
Lease intangible liabilities (4)	(2.5)		—
Other liabilities (5)	(0.9)		—
	$	414.1	£	180.1

(1) U.K. land includes £6.5 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 11.8 years.

(3) U.S. other assets consists of $810,000 of financing receivables with above-market terms and $689,000 of right of use assets under ground leases. U.K. other assets consists entirely of right of use assets under ground leases.

(4) The weighted average amortization period for acquired lease intangible liabilities is 13.7 years.

(5) U.S. other liabilities consists entirely of lease liabilities under ground leases.

Schedule of future impact related to amortization of above-market, below-market and in-place lease intangibles

The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease intangibles at June 30, 2021 (dollars in thousands):

	Net decrease to rental revenue		Increase to amortization expense
2021	$	(19,166)	$	86,752
2022	(37,749)		161,804
2023	(36,446)		145,644
2024	(34,737)		132,517
2025	(34,857)		118,843
Thereafter	(204,258)		637,525
Totals	$	(367,213)	$	1,283,085