Investments in Real Estate (Tables)

9 Months Ended

Sep. 30, 2021

Real Estate Investments, Net [Abstract]

Schedule of acquisitions

Below is a summary of our acquisitions for the nine months ended September 30, 2021:

	Number of Properties	Leasable Square Feet	Investment ($ in thousands)		Weighted Average Lease Term (Years)	Initial Average Cash Lease Yield (1)
Nine months ended September 30, 2021 (2)
Acquisitions - U.S. (in 38 states)	415	9,226,363	$	2,073,101	13.8	5.5	%
Acquisitions - Europe (U.K. and Spain)	71	5,217,192	1,520,816		10.5	5.5	%
Total acquisitions	486	14,443,555	$	3,593,917	12.4	5.5	%
Properties under development (3)	50	2,126,955	181,957		15.8	5.9	%
Total (4)	536	16,570,510	$	3,775,874	12.6	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 includes approximately $3.2 million received as settlement credits for 35 properties as reimbursement of free rent periods for the nine months ended September 30, 2021.

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 nine months ended September 30, 2021 caused any one client to be 10% or more of our total assets at September 30, 2021.

(3)Includes one U.K. development property that represents an investment of £4.7 million Sterling during the nine months ended September 30, 2021, converted at the applicable exchange rate on the funding date.

(4)Our clients occupying the new properties are 80.2% retail and 19.8% industrial, based on rental revenue. Approximately 43% of the rental revenue generated from acquisitions during the nine months ended September 30, 2021 is from investment grade rated clients, their subsidiaries or affiliated companies.

Below is a summary of our acquisitions for the nine months ended September 30, 2020:

	Number of Properties	Leasable Square Feet	Investment ($ in thousands)		Weighted Average Lease Term (Years)	Initial Average Cash Lease Yield
Nine months ended September 30, 2020 (1)
Acquisitions - U.S. (in 28 states)	154	3,002,461	$	821,830	14.8	6.2	%
Acquisitions - U.K. (2)	13	1,212,831	453,722		10.0	6.4	%
Total acquisitions	167	4,215,292	$	1,275,552	13.1	6.3	%
Properties under development - U.S.	13	836,587	23,301		16.3	6.4	%
Total (3)	180	5,051,879	$	1,298,853	13.1	6.3	%

(1)None of our investments during the nine months ended September 30, 2020 caused any one client to be 10% or more of our total assets at September 30, 2020.

(2)Represents investments of £356.7 million Sterling during the nine months ended September 30, 2020 converted at the applicable exchange rate on the date of the acquisition.

(3) Our clients occupying the new properties are 96.9% retail and 3.1% industrial, based on rental revenue. Approximately 56% of the rental revenue generated from acquisitions during the nine months ended September 30, 2020 was from investment grade rated clients, their subsidiaries or affiliated companies.

Schedule allocation of acquisitions

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

	Acquisitions - U.S.		Acquisitions - U.K.		Acquisitions - Spain
Nine months ended September 30, 2021	(USD)		(£ Sterling)		(€ Euro)
Land (1)	$	621.0	£	283.9	€	36.6
Buildings and improvements	955.0		549.9		36.3
Lease intangible assets (2)	350.4		173.5		23.3
Other assets (3)	379.3		20.2		—
Lease intangible liabilities (4)	(42.3)		(6.4)		—
Other liabilities (5)	(122.2)		(0.3)		—
	$	2,141.2	£	1,020.8	€	96.2

(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 13.0 years.

(3) U.S. other assets consists of $66.9 million of financing receivables with above-market terms, $41.7 million of right-of-use assets accounted for as finance leases, $5.5 million in investments in sales-type leases, and $265.2 million of right of use assets under ground leases. U.K. other assets consists of £2.7 million of financing receivables with above-market terms and £17.5 million of right-of-use assets accounted for as finance leases.

(4) The weighted average amortization period for acquired lease intangible liabilities is 18.5 years.

(5) U.S. other liabilities consists of $21.5 million of deferred rent on certain below-market leases and $100.7 million of lease liabilities under ground leases. U.K. other liabilities consists entirely of a GBP mortgage premium.

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

	Acquisitions - U.S.		Acquisitions - U.K.
Nine months ended September 30, 2020	(USD)		(£ Sterling)
Land (1)	$	226.6	£	97.5
Buildings and improvements	457.6		124.8
Lease intangible assets (2)	137.0		83.8
Other assets (3)	19.8		50.6
Lease intangible liabilities (4)	(5.4)		—
Other liabilities (5)	(0.9)		—
	$	834.7	£	356.7

(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 17.5 years.

(3) U.S. other assets consists of $19.1 million 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 14.8 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 September 30, 2021 (dollars in thousands):

	Net decrease to rental revenue		Increase to amortization expense
2021	$	(9,932)	$	48,623
2022	(39,158)		182,918
2023	(37,857)		165,335
2024	(36,247)		149,595
2025	(36,604)		135,666
Thereafter	(210,612)		761,786
Totals	$	(370,410)	$	1,443,923