Investments in Real Estate (Tables)

12 Months Ended

Dec. 31, 2021

Real Estate [Abstract]

Schedule of acquisitions

Below is a summary of our acquisitions for the year ended December 31, 2021 (information is unaudited and excludes properties assumed on November 1, 2021 in conjunction with our merger with VEREIT):

	Number of Properties	Leasable Square Feet	Investment ($ in thousands)		Weighted Average Lease Term (Years)	Initial Weighted Average Cash Lease Yield (1)
Year ended December 31, 2021 (2)
Acquisitions - U.S. (in 43 states)	714	14,727,335	$	3,608,573	14.1	5.5	%
Acquisitions - Europe (U.K. and Spain)	129	9,196,345	2,558,909		11.6	5.5	%
Total Acquisitions	843	23,923,680	$	6,167,482	13.1	5.5	%
Properties under Development (3)	68	2,681,676	243,278		15.7	6.0	%
Total (4)	911	26,605,356	$	6,410,760	13.2	5.5	%

(1)The initial weighted 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 $8.5 million received as settlement credits for 41 properties as reimbursement of free rent periods for the year ended December 31, 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 weighted 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 2021 caused any one client to be 10% or more of our total assets at December 31, 2021.

(3) Includes £7.0 million of investments in U.K. development properties, converted at the applicable exchange rate on the funding date.

(4) Our clients occupying the new properties are 83.6% retail and 16.4% industrial, based on rental revenue. Approximately 40% of the rental revenue generated from acquisitions during 2021 is from our investment grade rated clients, their subsidiaries or affiliated companies.

Below is a summary of our acquisitions for the year ended December 31, 2020 (unaudited):

	Number of Properties	Leasable Square Feet	Investment ($ in thousands)		Weighted Average Lease Term (Years)	Initial Weighted Average Cash Lease Yield
Year Ended December 31, 2020 (1)
Acquisitions - U.S. (in 30 states)	202	5,476,009	$	1,302,220	14.9	5.8	%
Acquisitions - U.K. (2)	24	2,120,256	920,934		10.8	6.1	%
Total Acquisitions	226	7,596,265	$	2,223,154	13.2	5.9	%
Properties under Development - U.S.	18	1,601,095	84,127		15.3	5.6	%
Total (3)	244	9,197,360	$	2,307,281	13.2	5.9	%

(1)None of our investments during 2020 caused any one client to be 10% or more of our total assets at December 31, 2020.

(2)Represents investments of £707.8 million Sterling during the year ended December 31, 2020 converted at the applicable exchange rate on the date of acquisition.

(3)Our clients occupying the new properties are 86.6% retail and 13.4% industrial, based on rental revenue. Approximately 61% of the rental revenue generated from acquisitions during 2020 is from our investment grade rated clients, their subsidiaries or affiliated companies.

Schedule allocation of acquisitions

Acquired properties accounted for as asset acquisitions during the year ended December 31, 2021, which had no associated contingent consideration, were allocated as follows (in millions):

	Acquisitions - U.S.		Acquisitions - U.K.		Acquisitions - Spain
Year ended December 31, 2021	(USD)		(£ Sterling)		(€ Euro)
Land (1)	$	1,059.3	£	422.3	€	108.4
Buildings and improvements	1,795.8		904.3		168.8
Lease intangible assets (2)	579.8		249.0		37.8
Other assets (3)	503.7		40.4		21.9
Lease intangible liabilities (4)	(92.2)		(6.8)		—
Other liabilities (5)	(130.6)		(0.3)		(16.5)
	$	3,715.8	£	1,608.9	€	320.4

(1) U.K. land includes £5.5 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 12.8 years.

(3) U.S. other assets consists of $161.5 million of financing receivables with above-market terms, $76.7 million of right-of-use assets accounted for as finance leases, $5.8 million in investments in sales-type leases, and $259.7 million of right of use assets under ground leases accounted for as operating leases. U.K. other assets consists of £7.2 million of financing receivables with above-market terms, £33.2 million of right-of-use assets accounted for as finance leases, and £13,000 of right of use assets under ground leases accounted for as operating leases. Spain other assets consists entirely of financing receivables with above-market terms.

(4) The weighted average amortization period for acquired lease intangible liabilities is 15.9 years.

(5) U.S. other liabilities consists of $27.1 million of deferred rent on certain below-market leases, $67.4 million of lease liabilities under ground leases accounted for as operating leases, and $36.1 million for lease liabilities under financing leases. U.K. other liabilities consists of £288,000 of a GBP mortgage premium and £13,000 of lease liabilities under ground leases. Spain other liabilities consists entirely of deferred rent on certain below-market leases.

Acquired properties accounted for as asset acquisitions during the year ended December 31, 2020, which had no associated contingent consideration, were allocated as follows (in millions):

	Acquisitions - U.S.		Acquisitions - U.K.
Year Ended December 31, 2020	(USD)		(£ Sterling)
Land (1)	$	338.4	£	253.4
Buildings and improvements	760.0		259.1
Lease intangible assets (2)	206.6		145.3
Other assets (3)	52.6		50.6
Lease intangible liabilities (4)	(9.3)		(0.6)
Other liabilities (5)	(0.9)		—
	$	1,347.4	£	707.8

(1) U.K. land includes £88.8 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 15.8 years.

(3) U.S. other assets consists of $51.9 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 16.7 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 December 31, 2021 (in thousands):

	Net increase (decrease) to rental revenue		Increase to amortization expense
2022	$	(59,676)	$	611,012
2023	(57,819)		524,957
2024	(51,873)		465,087
2025	(46,018)		396,948
2026	(37,220)		353,006
Thereafter	273,319		1,636,786
Totals	$	20,713	$	3,987,796

Schedule of property dispositions

The following summarizes our property dispositions (dollars in millions). These amounts exclude properties disposed from the spin-off of office properties to Orion Office REIT Inc. in November 2021.

	Year Ended December 31,
	2021		2020		2019
Number of properties	154		126		93
Net sales proceeds	$	250.3	$	262.5	$	108.9
Gain on sales of real estate	$	55.8	$	76.2	$	30.0

Schedule of investment in unconsolidated entities

The following is a summary of our investments in unconsolidated entities as of December 31, 2021 (in thousands):

	Ownership % (1)	Number of Properties	Carrying Amount of Investment as of (2)		Equity in Income (2)
Investment	December 31, 2021		December 31, 2021		December 31, 2021
Industrial Partnerships	20%	7	$	140,967	$	1,106

(1) Our ownership interest reflects legal ownership interest. Legal ownership may, at times, not equal our economic interest in the listed properties because of various provisions in certain entity agreements regarding capital contributions, distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, our actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with legal ownership interests.

(2) Our unconsolidated entities are a result of our merger with VEREIT. The total carrying amount of the investments was greater than the underlying equity in net assets by $100.3 million as of December 31, 2021. The difference relates to a step-up in fair value of the investment net assets acquired in connection with the merger with VEREIT on November 1, 2021. The step up in fair value was allocated to the individual investment assets and liabilities and is being amortized over the estimated useful life of the respective underlying tangible real estate assets, the lease term of the intangible real estate assets, and the remaining term of the mortgages payable. Prior to November 1, 2021, we did not own any unconsolidated entities.