FORM 10-Q |
(Mark One): | ||
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended June 30, 2019 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Maryland (State or Other Jurisdiction of Incorporation or Organization) | 75-6446078 (I.R.S. Employer Identification No.) |
17950 Preston Road, Suite 600, Dallas, Texas (Address of Principal Executive Offices) | 75252 (Zip Code) |
(972) 349-3200 (Registrant's telephone number, including area code) |
Securities Registered Pursuant to Section 12(b) of the Act: | ||||
Common Stock, $0.001 Par Value | CMCT | Nasdaq Global Market | ||
Common Stock, $0.001 Par Value | CMCT-L | Tel Aviv Stock Exchange | ||
Series L Preferred Stock, $0.001 Par Value | CMCTP | Nasdaq Global Market | ||
Series L Preferred Stock, $0.001 Par Value | CMCTP | Tel Aviv Stock Exchange | ||
(Title of each class) | (Trading symbol) | (Name of each exchange on which registered) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer ý |
Smaller reporting company ý | Emerging growth company o |
PAGE NO. | |||
PART I. | Financial Information | ||
PART II. | Other Information | ||
June 30, 2019 | December 31, 2018 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Investments in real estate, net | $ | 504,302 | $ | 1,040,937 | ||||
Cash and cash equivalents | 373,665 | 54,931 | ||||||
Restricted cash | 10,824 | 22,512 | ||||||
Loans receivable, net | 72,485 | 83,248 | ||||||
Accounts receivable, net | 4,821 | 6,640 | ||||||
Deferred rent receivable and charges, net | 33,158 | 84,230 | ||||||
Other intangible assets, net | 8,252 | 9,531 | ||||||
Other assets | 10,069 | 18,197 | ||||||
Assets held for sale, net (Note 3) | 178,927 | 22,175 | ||||||
TOTAL ASSETS | $ | 1,196,503 | $ | 1,342,401 | ||||
LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY | ||||||||
LIABILITIES: | ||||||||
Debt, net | $ | 162,337 | $ | 588,671 | ||||
Accounts payable and accrued expenses | 13,288 | 41,598 | ||||||
Intangible liabilities, net | 1,938 | 2,872 | ||||||
Due to related parties | 6,775 | 10,951 | ||||||
Other liabilities | 9,357 | 16,535 | ||||||
Liabilities associated with assets held for sale, net (Note 3) | 3,245 | 28,766 | ||||||
Total liabilities | 196,940 | 689,393 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 15) | ||||||||
REDEEMABLE PREFERRED STOCK: Series A, $0.001 par value; 36,000,000 shares authorized; 1,460,245 and 1,459,045 shares issued and outstanding, respectively, at June 30, 2019 and 1,566,386 and 1,565,346 shares issued and outstanding, respectively, at December 31, 2018; liquidation preference of $25.00 per share, subject to adjustment | 33,303 | 35,733 | ||||||
EQUITY: | ||||||||
Series A cumulative redeemable preferred stock, $0.001 par value; 36,000,000 shares authorized; 2,154,248 and 2,142,676 shares issued and outstanding, respectively, at June 30, 2019 and 1,287,169 and 1,281,804 shares issued and outstanding, respectively, at December 31, 2018; liquidation preference of $25.00 per share, subject to adjustment | 53,327 | 31,866 | ||||||
Series L cumulative redeemable preferred stock, $0.001 par value; 9,000,000 shares authorized; 8,080,740 shares issued and outstanding at June 30, 2019 and December 31, 2018; liquidation preference of $28.37 per share, subject to adjustment | 229,251 | 229,251 | ||||||
Common stock, $0.001 par value; 900,000,000 shares authorized; 43,805,741 and 43,795,073 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 44 | 44 | ||||||
Additional paid-in capital | 788,655 | 790,354 | ||||||
Accumulated other comprehensive income | — | 1,806 | ||||||
Distributions in excess of earnings | (105,634 | ) | (436,883 | ) | ||||
Total stockholders' equity | 965,643 | 616,438 | ||||||
Noncontrolling interests | 617 | 837 | ||||||
Total equity | 966,260 | 617,275 | ||||||
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK, AND EQUITY | $ | 1,196,503 | $ | 1,342,401 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Unaudited) | ||||||||||||||||
REVENUES: | ||||||||||||||||
Rental and other property income | $ | 22,419 | $ | 37,825 | $ | 56,000 | $ | 72,969 | ||||||||
Hotel income | 9,549 | 10,160 | 19,353 | 19,849 | ||||||||||||
Interest and other income | 4,888 | 3,559 | 8,780 | 7,020 | ||||||||||||
36,856 | 51,544 | 84,133 | 99,838 | |||||||||||||
EXPENSES: | ||||||||||||||||
Rental and other property operating | 15,658 | 20,765 | 35,911 | 38,681 | ||||||||||||
Asset management and other fees to related parties | 4,288 | 6,143 | 10,174 | 12,354 | ||||||||||||
Interest | 2,550 | 6,811 | 6,595 | 13,444 | ||||||||||||
General and administrative | 1,621 | 1,915 | 3,409 | 5,291 | ||||||||||||
Transaction costs | 216 | 344 | 260 | 344 | ||||||||||||
Depreciation and amortization | 7,185 | 13,325 | 16,815 | 26,473 | ||||||||||||
Loss on early extinguishment of debt (Note 7) | 4,911 | — | 29,982 | — | ||||||||||||
Impairment of real estate (Note 3) | 2,800 | — | 69,000 | — | ||||||||||||
39,229 | 49,303 | 172,146 | 96,587 | |||||||||||||
Gain on sale of real estate (Note 3) | 55,221 | — | 432,802 | — | ||||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES | 52,848 | 2,241 | 344,789 | 3,251 | ||||||||||||
Provision for income taxes | 281 | 292 | 599 | 680 | ||||||||||||
NET INCOME | 52,567 | 1,949 | 344,190 | 2,571 | ||||||||||||
Net (income) loss attributable to noncontrolling interests | (1 | ) | (12 | ) | 173 | (16 | ) | |||||||||
NET INCOME ATTRIBUTABLE TO THE COMPANY | 52,566 | 1,937 | 344,363 | 2,555 | ||||||||||||
Redeemable preferred stock dividends declared or accumulated (Note 10) | (4,302 | ) | (3,814 | ) | (8,464 | ) | (7,459 | ) | ||||||||
Redeemable preferred stock redemptions (Note 10) | (4 | ) | 1 | (8 | ) | 2 | ||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | 48,260 | $ | (1,876 | ) | $ | 335,891 | $ | (4,902 | ) | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: | ||||||||||||||||
Basic | $ | 1.10 | $ | (0.04 | ) | $ | 7.67 | $ | (0.11 | ) | ||||||
Diluted | $ | 1.07 | $ | (0.04 | ) | $ | 7.36 | $ | (0.11 | ) | ||||||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: | ||||||||||||||||
Basic | 43,791 | 43,791 | 43,793 | 43,788 | ||||||||||||
Diluted | 45,853 | 43,791 | 45,804 | 43,788 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Unaudited) | ||||||||||||||||
NET INCOME | $ | 52,567 | $ | 1,949 | $ | 344,190 | $ | 2,571 | ||||||||
Other comprehensive income (loss): cash flow hedges | — | 407 | (1,806 | ) | 1,590 | |||||||||||
COMPREHENSIVE INCOME | 52,567 | 2,356 | 342,384 | 4,161 | ||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests | (1 | ) | (12 | ) | 173 | (16 | ) | |||||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $ | 52,566 | $ | 2,344 | $ | 342,557 | $ | 4,145 |
Six Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||
Series A | Series L | ||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Amount | Shares | Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Distributions in Excess of Earnings | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2018 | 43,795,073 | $ | 44 | 1,281,804 | $ | 31,866 | 8,080,740 | $ | 229,251 | $ | 790,354 | $ | 1,806 | $ | (436,883 | ) | $ | 837 | $ | 617,275 | |||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | 38 | — | — | — | 38 | ||||||||||||||||||||||||||||||
Common dividends ($0.125 per share) | — | — | — | — | — | — | — | — | (5,474 | ) | — | (5,474 | ) | ||||||||||||||||||||||||||||
Issuance of Series A Preferred Warrants | — | — | — | — | — | — | 9 | — | — | — | 9 | ||||||||||||||||||||||||||||||
Dividends to holders of Series A Preferred Stock ($0.34375 per share) | — | — | — | — | — | — | — | — | (1,010 | ) | — | (1,010 | ) | ||||||||||||||||||||||||||||
Reclassification of Series A Preferred Stock to permanent equity | — | — | 389,577 | 9,712 | — | — | (822 | ) | — | — | — | 8,890 | |||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | — | — | (1,500 | ) | (37 | ) | — | — | (1 | ) | — | — | — | (38 | ) | ||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | (1,806 | ) | — | — | (1,806 | ) | ||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | — | 291,797 | (174 | ) | 291,623 | |||||||||||||||||||||||||||||
Balances, March 31, 2019 | 43,795,073 | $ | 44 | 1,669,881 | $ | 41,541 | 8,080,740 | $ | 229,251 | $ | 789,578 | $ | — | $ | (151,570 | ) | $ | 663 | $ | 909,507 | |||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | — | (47 | ) | (47 | ) | ||||||||||||||||||||||||||||
Stock-based compensation expense | 10,668 | — | — | — | — | — | 44 | — | — | — | 44 | ||||||||||||||||||||||||||||||
Common dividends ($0.125 per share) | — | — | — | — | — | — | — | — | (5,476 | ) | — | (5,476 | ) | ||||||||||||||||||||||||||||
Issuance of Series A Preferred Warrants | — | — | — | — | — | — | 31 | — | — | — | 31 | ||||||||||||||||||||||||||||||
Dividends to holders of Series A Preferred Stock ($0.34375 per share) | — | — | — | — | — | — | — | — | (1,150 | ) | — | (1,150 | ) | ||||||||||||||||||||||||||||
Reclassification of Series A Preferred Stock to permanent equity | — | — | 474,462 | 11,827 | — | — | (1,002 | ) | — | — | — | 10,825 | |||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | — | — | (1,667 | ) | (41 | ) | — | — | 4 | — | (4 | ) | — | (41 | ) | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 52,566 | 1 | 52,567 | ||||||||||||||||||||||||||||||
Balances, June 30, 2019 | 43,805,741 | $ | 44 | 2,142,676 | $ | 53,327 | 8,080,740 | $ | 229,251 | $ | 788,655 | $ | — | $ | (105,634 | ) | $ | 617 | $ | 966,260 |
Six Months Ended June 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||
Series A | Series L | ||||||||||||||||||||||||||||||||||||||||
Shares | Par Value | Shares | Amount | Shares | Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Distributions in Excess of Earnings | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||
Balances, December 31, 2017 | 43,784,939 | $ | 44 | 60,592 | $ | 1,508 | 8,080,740 | $ | 229,251 | $ | 792,631 | $ | 1,631 | $ | (399,250 | ) | $ | 890 | $ | 626,705 | |||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | 38 | — | — | — | 38 | ||||||||||||||||||||||||||||||
Common dividends ($0.125 per share) | — | — | — | — | — | — | — | — | (5,473 | ) | — | (5,473 | ) | ||||||||||||||||||||||||||||
Issuance of Series A Preferred Warrants | — | — | — | — | — | — | 17 | — | — | — | 17 | ||||||||||||||||||||||||||||||
Dividends to holders of Series A Preferred Stock ($0.34375 per share) | — | — | — | — | — | — | — | — | (493 | ) | — | (493 | ) | ||||||||||||||||||||||||||||
Reclassification of Series A Preferred Stock to permanent equity | — | — | 82,841 | 2,060 | — | — | (175 | ) | — | — | — | 1,885 | |||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | — | — | — | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | 1,183 | — | — | 1,183 | ||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 618 | 4 | 622 | ||||||||||||||||||||||||||||||
Balances, March 31, 2018 | 43,784,939 | $ | 44 | 143,433 | $ | 3,568 | 8,080,740 | $ | 229,251 | $ | 792,512 | $ | 2,814 | $ | (404,598 | ) | $ | 894 | $ | 624,485 | |||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | — | (67 | ) | (67 | ) | ||||||||||||||||||||||||||||
Stock-based compensation expense | 10,134 | — | — | — | — | — | 48 | — | — | — | 48 | ||||||||||||||||||||||||||||||
Common dividends ($0.125 per share) | — | — | — | — | — | — | — | — | (5,474 | ) | — | (5,474 | ) | ||||||||||||||||||||||||||||
Issuance of Series A Preferred Warrants | — | — | — | — | — | — | 23 | — | — | — | 23 | ||||||||||||||||||||||||||||||
Dividends to holders of Series A Preferred Stock ($0.34375 per share) | — | — | — | — | — | — | — | — | (662 | ) | — | (662 | ) | ||||||||||||||||||||||||||||
Reclassification of Series A Preferred Stock to permanent equity | — | — | 164,077 | 4,069 | — | — | (339 | ) | — | — | — | 3,730 | |||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | — | — | — | — | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | 407 | — | — | 407 | ||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | 1,937 | 12 | 1,949 | ||||||||||||||||||||||||||||||
Balances, June 30, 2018 | 43,795,073 | $ | 44 | 307,510 | $ | 7,637 | 8,080,740 | $ | 229,251 | $ | 792,245 | $ | 3,221 | $ | (408,797 | ) | $ | 839 | $ | 624,440 |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 344,190 | $ | 2,571 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Deferred rent and amortization of intangible assets, liabilities and lease inducements | (999 | ) | (2,807 | ) | ||||
Depreciation and amortization | 16,815 | 26,473 | ||||||
Reclassification from AOCI to interest expense | (1,806 | ) | — | |||||
Reclassification from other assets to interest expense for swap termination | 1,421 | — | ||||||
Change in fair value of swaps | 209 | — | ||||||
Gain on sale of real estate | (432,802 | ) | — | |||||
Impairment of real estate | 69,000 | — | ||||||
Loss on early extinguishment of debt | 29,982 | — | ||||||
Straight-line rent expense | — | (18 | ) | |||||
Amortization of deferred loan costs | 590 | 386 | ||||||
Amortization of premiums and discounts on debt | (10 | ) | (109 | ) | ||||
Unrealized premium adjustment | 1,007 | 1,436 | ||||||
Amortization and accretion on loans receivable, net | (247 | ) | (168 | ) | ||||
Bad debt (recovery) expense | (63 | ) | 151 | |||||
Deferred income taxes | (9 | ) | 21 | |||||
Stock-based compensation | 82 | 86 | ||||||
Loans funded, held for sale to secondary market | (13,892 | ) | (21,345 | ) | ||||
Proceeds from sale of guaranteed loans | 23,826 | 29,098 | ||||||
Principal collected on loans subject to secured borrowings | 461 | 1,501 | ||||||
Other operating activity | (386 | ) | (525 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable and interest receivable | 817 | 4,340 | ||||||
Other assets | 2,074 | (2,283 | ) | |||||
Accounts payable and accrued expenses | (2,208 | ) | (861 | ) | ||||
Deferred leasing costs | (934 | ) | (1,341 | ) | ||||
Other liabilities | (7,142 | ) | (82 | ) | ||||
Due to related parties | (3,739 | ) | 389 | |||||
Net cash provided by operating activities | 26,237 | 36,913 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Additions to investments in real estate | (16,103 | ) | (8,053 | ) | ||||
Acquisition of real estate | — | (112,048 | ) | |||||
Proceeds from sale of real estate, net | 765,116 | — | ||||||
Loans funded | (4,631 | ) | (7,115 | ) | ||||
Principal collected on loans | 4,254 | 6,389 | ||||||
Other investing activity | 319 | 76 | ||||||
Net cash provided by (used in) investing activities | 748,955 | (120,751 | ) |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
(Unaudited) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Payment of unsecured revolving lines of credit, revolving credit facility and term note | (130,000 | ) | — | |||||
Payment of mortgages payable | (46,000 | ) | — | |||||
Investments in marketable securities in connection with the legal defeasance of mortgages payable | (268,194 | ) | — | |||||
Payment of principal on SBA 7(a) loan-backed notes | (6,397 | ) | (597 | ) | ||||
Proceeds from SBA 7(a) loan-backed notes | — | 38,200 | ||||||
Payment of principal on secured borrowings | (461 | ) | (1,501 | ) | ||||
Prepayment penalties and other payments for early extinguishment of debt | (5,660 | ) | — | |||||
Proceeds from secured borrowings | — | 772 | ||||||
Payment of deferred preferred stock offering costs | (336 | ) | (857 | ) | ||||
Payment of deferred loan costs | (34 | ) | (1,071 | ) | ||||
Payment of other deferred costs | (195 | ) | — | |||||
Payment of common dividends | (10,950 | ) | (10,947 | ) | ||||
Payment of special cash dividends | — | (1,575 | ) | |||||
Net proceeds from issuance of Series A Preferred Warrants | 40 | 40 | ||||||
Net proceeds from issuance of Series A Preferred Stock | 17,481 | 19,923 | ||||||
Payment of preferred stock dividends | (15,945 | ) | (742 | ) | ||||
Redemption of Series A Preferred Stock | (153 | ) | (66 | ) | ||||
Noncontrolling interests' distributions | (47 | ) | (67 | ) | ||||
Net cash (used in) provided by financing activities | (466,851 | ) | 41,512 | |||||
Change in cash balances included in assets held for sale | (1,295 | ) | — | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | 307,046 | (42,326 | ) | |||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||||
Beginning of period | 77,443 | 156,318 | ||||||
End of period | $ | 384,489 | $ | 113,992 | ||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS: | ||||||||
Cash and cash equivalents | $ | 373,665 | $ | 91,192 | ||||
Restricted cash | 10,824 | 22,800 | ||||||
Total cash and cash equivalents and restricted cash | $ | 384,489 | $ | 113,992 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid during the period for interest | $ | 8,499 | $ | 13,124 | ||||
Federal income taxes paid | $ | 700 | $ | 247 | ||||
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Additions to investments in real estate included in accounts payable and accrued expenses | $ | 1,292 | $ | 11,835 | ||||
Net increase in fair value of derivatives applied to other comprehensive income | $ | — | $ | 1,590 | ||||
Additions to deferred costs included in accounts payable and accrued expenses | $ | 79 | $ | 276 | ||||
Additions to preferred stock offering costs included in accounts payable and accrued expenses | $ | 355 | $ | 334 | ||||
Accrual of dividends payable to preferred stockholders | $ | 1,150 | $ | 662 | ||||
Preferred stock offering costs offset against redeemable preferred stock in temporary equity | $ | 122 | $ | 140 | ||||
Reclassification of Series A Preferred Stock from temporary equity to permanent equity | $ | 19,715 | $ | 5,615 | ||||
Reclassification of loans receivable, net to real estate owned | $ | 243 | $ | — | ||||
Establishment of right-of use asset and lease liability | $ | 362 | $ | — | ||||
Marketable securities transferred in connection with the legal defeasance of mortgages payable | $ | 268,194 | $ | — | ||||
Mortgage notes payable legally defeased | $ | 245,000 | $ | — | ||||
Mortgage note assumed in connection with our sale of real estate | $ | 28,200 | $ | — |
Buildings and improvements | 15 - 40 years | |
Furniture, fixtures, and equipment | 3 - 5 years | |
Tenant improvements | Shorter of the useful lives or the terms of the related leases |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Rental and other property income | ||||||||||||||||
Fixed lease payments (1) | $ | 20,640 | $ | 34,114 | $ | 51,536 | $ | 67,315 | ||||||||
Variable lease payments (2) | 1,779 | 3,711 | 4,464 | 5,654 | ||||||||||||
Rental and other property income | $ | 22,419 | $ | 37,825 | $ | 56,000 | $ | 72,969 |
(1) | Fixed lease payments include contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term, including amortization of acquired above-market leases, below-market leases and lease incentives. |
(2) | Variable lease payments include expense reimbursements billed to tenants and percentage rent, net of bad debt expense from our operating leases. |
• | cancellable and noncancelable room revenues from reservations and |
• | ancillary services including facility usage and food or beverage. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Hotel properties | ||||||||||||||||
Hotel income | $ | 9,549 | $ | 10,160 | $ | 19,353 | $ | 19,849 | ||||||||
Rental and other property income | 736 | 733 | 1,472 | 1,496 | ||||||||||||
Interest and other income | 45 | 54 | 94 | 93 | ||||||||||||
Hotel revenues | $ | 10,330 | $ | 10,947 | $ | 20,919 | $ | 21,438 |
Property | Asset Type | Date of Sale | Square Feet | Sales Price | Transaction Costs | Gain on Sale | |||||||||||||
(in thousands) | |||||||||||||||||||
March Oakland Properties, Oakland, CA (1) | Office / Parking Garage | March 1, 2019 | 975,596 | $ | 512,016 | $ | 8,971 | $ | 289,779 | ||||||||||
830 1st Street, Washington, D.C. | Office | March 1, 2019 | 247,337 | 116,550 | 2,438 | 45,710 | |||||||||||||
260 Townsend Street, San Francisco, CA | Office | March 14, 2019 | 66,682 | 66,000 | 2,539 | 42,092 | |||||||||||||
1333 Broadway, Oakland, CA | Office | May 16, 2019 | 254,523 | 115,430 | 658 | 55,221 | |||||||||||||
$ | 809,996 | $ | 14,606 | $ | 432,802 |
(1) | The "March Oakland Properties" consist of 1901 Harrison Street, 2100 Franklin Street, 2101 Webster Street, and 2353 Webster Street Parking Garage. |
(in thousands) | ||||
Assets | ||||
Investments in real estate, net | $ | 318,918 | ||
Deferred rent receivable and charges, net | 41,280 | |||
Other intangible assets, net | 316 | |||
Total assets | $ | 360,514 | ||
Liabilities | ||||
Debt, net (1) (2) | $ | 318,072 | ||
Total liabilities | $ | 318,072 |
(1) | Debt is presented net of deferred loan costs of $1,704,000 and accumulated amortization of $576,000. |
(2) | A mortgage loan with an outstanding principal balance of $28,200,000 was assumed by the buyer in connection with the sale of our property in San Francisco, California. A mortgage loan with an outstanding principal balance of $46,000,000 was prepaid in connection with the sale of our property in Washington, D.C. that was collateral for the loan. Mortgage loans with an aggregate outstanding principal balance of $205,500,000 were legally defeased in connection with the sale of the March Oakland Properties that were collateral for the loans. A mortgage loan with an outstanding principal balance of $39,500,000 was legally defeased in connection with the sale in May 2019 of our property in Oakland, California that was collateral for the loan. |
Property | Asset Type | Date of Acquisition | Square Feet | Purchase Price (1) | ||||||
(in thousands) | ||||||||||
9460 Wilshire Boulevard, Beverly Hills, CA | Office | January 18, 2018 | 91,750 | $ | 132,000 |
(1) | In December 2017, at the time we entered into the purchase and sale agreement, we made a $20,000,000 non-refundable deposit to an escrow account that was included in other assets on our consolidated balance sheet at December 31, 2017. Transaction costs that were capitalized in connection with the acquisition of this property totaled $48,000, which are not included in the purchase price above. |
(in thousands) | ||||
Land | $ | 52,199 | ||
Land improvements | 756 | |||
Buildings and improvements | 74,522 | |||
Tenant improvements | 1,451 | |||
Acquired in-place leases (1) | 7,003 | |||
Acquired above-market leases (1) | 109 | |||
Acquired below-market leases (1) | (3,992 | ) | ||
Net assets acquired | $ | 132,048 |
(1) | Acquired in-place leases, above-market leases, and below-market leases have weighted average amortization periods of 3 years, 2 years, and 3 years, respectively. |
June 30, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Assets | ||||||||
Investments in real estate, net (1) | $ | 157,608 | $ | 17,123 | ||||
Cash and cash equivalents | 2,050 | 755 | ||||||
Accounts receivable, net | 1,075 | 41 | ||||||
Deferred rent receivable and charges, net (2) | 13,992 | 4,009 | ||||||
Other intangible assets, net (3) | — | 220 | ||||||
Other assets (4) | 4,202 | 27 | ||||||
Total assets held for sale, net | $ | 178,927 | $ | 22,175 | ||||
Liabilities | ||||||||
Debt, net (5) | $ | — | $ | 28,018 | ||||
Accounts payable and accrued expenses | 2,160 | 370 | ||||||
Due to related parties | 518 | 81 | ||||||
Other liabilities | 567 | 297 | ||||||
Total liabilities associated with assets held for sale, net | $ | 3,245 | $ | 28,766 |
(1) | Investments in real estate of $230,523,000 and $24,832,000 at June 30, 2019 and December 31, 2018, respectively, are presented net of accumulated depreciation of $72,915,000 and $7,709,000, respectively. |
(2) | Deferred rent receivable and charges consist of deferred rent receivable of $9,640,000 and deferred leasing costs of $11,165,000 net of accumulated amortization of $6,813,000 at June 30, 2019. Deferred rent receivable and charges consist of deferred rent receivable of $2,909,000 and deferred leasing costs of $1,669,000 net of accumulated amortization of $569,000 at December 31, 2018. |
(3) | Other intangible assets, net, at December 31, 2018 represent acquired in-place leases of $1,778,000, which are presented net of accumulated amortization of $1,558,000. |
(4) | Other assets at June 30, 2019 include lease inducements of $8,966,000, which are presented net of accumulated amortization of $4,870,000. |
(5) | Debt, net, at December 31, 2018 includes the outstanding principal balance of 260 Townsend Street of $28,200,000, net of deferred loan costs of $243,000 and accumulated amortization of $61,000. |
June 30, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Land | $ | 134,422 | $ | 266,410 | ||||
Land improvements | 2,713 | 18,368 | ||||||
Buildings and improvements | 437,683 | 912,892 | ||||||
Furniture, fixtures, and equipment | 3,683 | 4,245 | ||||||
Tenant improvements | 34,038 | 133,487 | ||||||
Work in progress | 7,152 | 9,234 | ||||||
Investments in real estate | 619,691 | 1,344,636 | ||||||
Accumulated depreciation | (115,389 | ) | (303,699 | ) | ||||
Net investments in real estate | $ | 504,302 | $ | 1,040,937 |
June 30, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
SBA 7(a) loans receivable, subject to loan-backed notes | $ | 32,966 | $ | 36,847 | ||||
SBA 7(a) loans receivable, subject to credit risk | 23,004 | 29,385 | ||||||
SBA 7(a) loans receivable, subject to secured borrowings | 15,905 | 16,409 | ||||||
Loans receivable | 71,875 | 82,641 | ||||||
Deferred capitalized costs | 1,143 | 1,309 | ||||||
Loan loss reserves | (533 | ) | (702 | ) | ||||
Loans receivable, net | $ | 72,485 | $ | 83,248 |
Assets | Liabilities | |||||||||||||||
June 30, 2019 | Acquired Above-Market Leases | Acquired In-Place Leases | Trade Name and License | Acquired Below-Market Leases | ||||||||||||
(in thousands) | ||||||||||||||||
Gross balance | $ | 146 | $ | 14,054 | $ | 2,957 | $ | (4,757 | ) | |||||||
Accumulated amortization | (93 | ) | (8,812 | ) | — | 2,819 | ||||||||||
$ | 53 | $ | 5,242 | $ | 2,957 | $ | (1,938 | ) | ||||||||
Average useful life (in years) | 3 | 8 | Indefinite | 3 |
Assets | Liabilities | |||||||||||||||
December 31, 2018 | Acquired Above-Market Leases | Acquired In-Place Leases | Trade Name and License | Acquired Below-Market Leases | ||||||||||||
(in thousands) | ||||||||||||||||
Gross balance | $ | 146 | $ | 16,210 | $ | 2,957 | $ | (6,618 | ) | |||||||
Accumulated amortization | (51 | ) | (9,731 | ) | — | 3,746 | ||||||||||
$ | 95 | $ | 6,479 | $ | 2,957 | $ | (2,872 | ) | ||||||||
Average useful life (in years) | 3 | 8 | Indefinite | 4 |
Assets | Liabilities | |||||||||||
Years Ending December 31, | Acquired Above-Market Leases | Acquired In-Place Leases | Acquired Below-Market Leases | |||||||||
(in thousands) | ||||||||||||
2019 (Six months ending December 31, 2019) | $ | 21 | $ | 971 | $ | (656 | ) | |||||
2020 | 9 | 1,349 | (701 | ) | ||||||||
2021 | 5 | 899 | (347 | ) | ||||||||
2022 | 5 | 663 | (234 | ) | ||||||||
2023 | 6 | 375 | — | |||||||||
Thereafter | 7 | 985 | — | |||||||||
$ | 53 | $ | 5,242 | $ | (1,938 | ) |
June 30, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Mortgage loan with a fixed interest rate of 4.14% per annum, with monthly payments of interest only, and a balance of $97,100,000 due on July 1, 2026. The loan is nonrecourse. On March 1, 2019, mortgage loans with an aggregate outstanding principal balance of $205,500,000 were legally defeased in connection with the sale of the properties that were collateral for the loans. On May 16, 2019, one loan with an outstanding principal balance of $39,500,000 was legally defeased in connection with the sale of the property that was collateral for the loan. | $ | 97,100 | $ | 342,100 | ||||
Mortgage loan with a fixed interest rate of 4.50% per annum, with monthly payments of interest only for 10 years, and payments of interest and principal starting in February 2022. The loan had a $42,008,000 balance due on January 5, 2027. The loan was nonrecourse. On March 1, 2019, the mortgage loan was prepaid in connection with the sale of the property that was collateral for the loan. | — | 46,000 | ||||||
97,100 | 388,100 | |||||||
Deferred loan costs related to mortgage loans | (187 | ) | (1,177 | ) | ||||
Total Mortgages Payable | 96,913 | 386,923 | ||||||
Secured borrowing principal on SBA 7(a) loans sold for a premium and excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 6.13% and 5.89% at June 30, 2019 and December 31, 2018, respectively. | 10,906 | 11,283 | ||||||
Secured borrowing principal on SBA 7(a) loans sold for excess spread—variable rate, reset quarterly, based on prime rate with weighted average coupon rate of 3.82% and 3.57% at June 30, 2019 and December 31, 2018, respectively. | 4,398 | 4,482 | ||||||
15,304 | 15,765 | |||||||
Unamortized premiums | 888 | 940 | ||||||
Total Secured Borrowings—Government Guaranteed Loans | 16,192 | 16,705 | ||||||
Revolving credit facility | — | 130,000 | ||||||
SBA 7(a) loan-backed notes with a variable interest rate which resets monthly based on the lesser of the one-month LIBOR plus 1.40% or the prime rate less 1.08%, with payments of interest and principal due monthly. Balance due at maturity in March 20, 2043. | 27,372 | 33,769 | ||||||
Junior subordinated notes with a variable interest rate which resets quarterly based on the three-month LIBOR plus 3.25%, with quarterly interest only payments. Balance due at maturity on March 30, 2035. | 27,070 | 27,070 | ||||||
54,442 | 190,839 | |||||||
Deferred loan costs related to other debt | (3,397 | ) | (3,941 | ) | ||||
Discount on junior subordinated notes | (1,813 | ) | (1,855 | ) | ||||
Total Other Debt | 49,232 | 185,043 | ||||||
Total Debt | $ | 162,337 | $ | 588,671 |
Years Ending December 31, | Mortgages Payable | Secured Borrowings Principal (1) | Other (1) (2) | Total | ||||||||||||
(in thousands) | ||||||||||||||||
2019 (Six months ending December 31, 2019) | $ | — | $ | 281 | $ | 943 | $ | 1,224 | ||||||||
2020 | — | 584 | 1,931 | 2,515 | ||||||||||||
2021 | — | 616 | 1,982 | 2,598 | ||||||||||||
2022 | — | 650 | 2,034 | 2,684 | ||||||||||||
2023 | — | 686 | 2,094 | 2,780 | ||||||||||||
Thereafter | 97,100 | 12,487 | 45,458 | 155,045 | ||||||||||||
$ | 97,100 | $ | 15,304 | $ | 54,442 | $ | 166,846 |
(1) | Principal payments on secured borrowings and SBA 7(a) loan-backed notes, which are included in Other, are generally dependent upon cash flows received from the underlying loans. Our estimate of their repayment is based on scheduled payments on the underlying loans. Our estimate will differ from actual amounts to the extent we experience prepayments and or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans. |
(2) | Represents the junior subordinated notes and SBA 7(a) loan-backed notes. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Numerator: | |||||||||||||||
Net income (loss) attributable to common stockholders | $ | 48,260 | $ | (1,876 | ) | $ | 335,891 | $ | (4,902 | ) | |||||
Redeemable preferred stock dividends declared on dilutive shares | 659 | — | 1,151 | — | |||||||||||
Diluted net income (loss) attributable to common stockholders | $ | 48,919 | $ | (1,876 | ) | $ | 337,042 | $ | (4,902 | ) | |||||
Denominator: | |||||||||||||||
Basic weighted average shares of Common Stock outstanding | 43,791 | 43,791 | 43,793 | 43,788 | |||||||||||
Effect of dilutive securities—contingently issuable shares | 2,062 | — | 2,011 | — | |||||||||||
Diluted weighted average shares and common stock equivalents outstanding | 45,853 | 43,791 | 45,804 | 43,788 | |||||||||||
Net income (loss) attributable to common stockholders per share: | |||||||||||||||
Basic | $ | 1.10 | $ | (0.04 | ) | $ | 7.67 | $ | (0.11 | ) | |||||
Diluted | $ | 1.07 | $ | (0.04 | ) | $ | 7.36 | $ | (0.11 | ) |
Declaration Date | Payment Date | Number of Shares | Cash Dividends Declared | |||||
(in thousands) | ||||||||
June 4, 2019 | July 15, 2019 | 3,601,721 | $ | 1,150 | ||||
February 20, 2019 | April 15, 2019 | 3,149,924 | $ | 1,010 | ||||
June 4, 2018 | July 16, 2018 | 2,149,863 | $ | 662 | ||||
March 6, 2018 | April 16, 2018 | 1,674,841 | $ | 493 |
Accumulation Period | Dividends | |||||||
Start Date | End Date | Number of Shares | Accumulated | |||||
(in thousands) | ||||||||
April 1, 2019 | June 30, 2019 | 8,080,740 | $ | 3,152 | ||||
January 1, 2019 | March 31, 2019 | 8,080,740 | $ | 3,152 | ||||
April 1, 2018 | June 30, 2018 | 8,080,740 | $ | 3,152 | ||||
January 1, 2018 | March 31, 2018 | 8,080,740 | $ | 3,152 |
Declaration Date | Payment Date | Type | Cash Dividend Per Common Share | |||||
June 4, 2019 | June 27, 2019 | Regular Quarterly | $ | 0.12500 | ||||
February 20, 2019 | March 25, 2019 | Regular Quarterly | $ | 0.12500 | ||||
June 4, 2018 | June 28, 2018 | Regular Quarterly | $ | 0.12500 | ||||
March 6, 2018 | March 29, 2018 | Regular Quarterly | $ | 0.12500 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Accumulated other comprehensive income, at beginning of period | $ | — | $ | 2,814 | $ | 1,806 | $ | 1,631 | ||||||||
Other comprehensive income before reclassifications | — | 560 | — | 1,759 | ||||||||||||
Amounts reclassified to accumulated other comprehensive income (1) | — | (153 | ) | (1,806 | ) | (169 | ) | |||||||||
Net current period other comprehensive income | — | 407 | (1,806 | ) | 1,590 | |||||||||||
Accumulated other comprehensive income, at end of period | $ | — | $ | 3,221 | $ | — | $ | 3,221 |
(1) | The amounts from AOCI were reclassified as a decrease to interest expense in our consolidated statements of operations. |
June 30, 2019 | December 31, 2018 | Level | Balance Sheet Location | ||||||||||
(in thousands) | |||||||||||||
Assets: | |||||||||||||
Interest rate swaps | $ | — | $ | 1,630 | 2 | Other assets |
June 30, 2019 | December 31, 2018 | ||||||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | Level | |||||||||||||||
(in thousands) | |||||||||||||||||||
Assets: | |||||||||||||||||||
SBA 7(a) loans receivable, subject to loan-backed notes | $ | 32,982 | $ | 34,088 | $ | 37,031 | $ | 38,357 | 3 | ||||||||||
SBA 7(a) loans receivable, subject to credit risk | 23,539 | 24,644 | 29,748 | 30,630 | 3 | ||||||||||||||
SBA 7(a) loans receivable, subject to secured borrowings | 15,964 | 16,192 | 16,469 | 16,706 | 3 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Mortgages payable (1) | 96,913 | 99,078 | 386,923 | 377,364 | 3 | ||||||||||||||
Junior subordinated notes | 25,257 | 24,426 | 25,215 | 24,462 | 3 |
(1) | The December 31, 2018 carrying amount and estimated fair value of mortgages payable exclude one mortgage loan with carrying value of $28,018,000 that had been classified as liabilities associated with assets held for sale, net, on our consolidated balance sheet at December 31, 2018 (Notes 3 and 7). |
Daily Average Adjusted Fair Value of CIM Urban's Assets | ||||||||
Quarterly Fee Percentage | ||||||||
From Greater of | To and Including | |||||||
(in thousands) | ||||||||
$ | — | $ | 500,000 | 0.2500% | ||||
500,000 | 1,000,000 | 0.2375% | ||||||
1,000,000 | 1,500,000 | 0.2250% | ||||||
1,500,000 | 4,000,000 | 0.2125% | ||||||
4,000,000 | 20,000,000 | 0.1000% |
Years Ending December 31, | Total (1) | |||
(in thousands) | ||||
2019 (Six months ending December 31, 2019) | $ | 24,084 | ||
2020 | 45,978 | |||
2021 | 39,323 | |||
2022 | 36,141 | |||
2023 | 33,521 | |||
Thereafter | 82,223 | |||
$ | 261,270 |
(1) | Excludes future minimum rental revenue related to 899 and 999 N Capitol Street, which are classified as held for sale on our consolidated balance sheet at June 30, 2019 (Note 3). |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
California | 74.4 | % | 77.7 | % | 75.6 | % | 77.3 | % | ||||
Washington, D.C. | 20.4 | 19.1 | 20.1 | 19.5 | ||||||||
Texas | 5.2 | 3.2 | 4.3 | 3.2 | ||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
June 30, 2019 | December 31, 2018 | |||||
California (1) | 72.7 | % | 70.6 | % | ||
Washington, D.C. (1) | 23.6 | 27.2 | ||||
Texas | 3.7 | 2.2 | ||||
100.0 | % | 100.0 | % |
(1) | The June 30, 2019 percentage for Washington, D.C. includes the assets of 899, 999 and 901 N Capitol Street, which are classified as held for sale on our consolidated balance sheet at June 30, 2019 (Note 3). The December 31, 2018 percentage for California includes the assets of 260 Townsend Street, which was classified as held for sale on our consolidated balance sheet at December 31, 2018 (Note 3). |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Office: | ||||||||||||||||
Revenues | $ | 22,050 | $ | 37,889 | $ | 55,495 | $ | 72,701 | ||||||||
Property expenses: | ||||||||||||||||
Operating | 8,913 | 13,928 | 22,472 | 25,311 | ||||||||||||
General and administrative | 202 | 98 | 356 | 979 | ||||||||||||
Total property expenses | 9,115 | 14,026 | 22,828 | 26,290 | ||||||||||||
Segment net operating income—office | 12,935 | 23,863 | 32,667 | 46,411 | ||||||||||||
Hotel: | ||||||||||||||||
Revenues | 10,330 | 10,947 | 20,919 | 21,438 | ||||||||||||
Property expenses: | ||||||||||||||||
Operating | 6,745 | 6,837 | 13,439 | 13,370 | ||||||||||||
General and administrative | 63 | — | 77 | 18 | ||||||||||||
Total property expenses | 6,808 | 6,837 | 13,516 | 13,388 | ||||||||||||
Segment net operating income—hotel | 3,522 | 4,110 | 7,403 | 8,050 | ||||||||||||
Lending: | ||||||||||||||||
Revenues | 2,977 | 2,708 | 5,901 | 5,699 | ||||||||||||
Lending expenses: | ||||||||||||||||
Interest expense | 536 | 300 | 1,118 | 484 | ||||||||||||
Fees to related party | 551 | 639 | 1,188 | 1,240 | ||||||||||||
General and administrative | 335 | 390 | 838 | 859 | ||||||||||||
Total lending expenses | 1,422 | 1,329 | 3,144 | 2,583 | ||||||||||||
Segment net operating income—lending | 1,555 | 1,379 | 2,757 | 3,116 | ||||||||||||
Total segment net operating income | $ | 18,012 | $ | 29,352 | $ | 42,827 | $ | 57,577 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Total segment net operating income | $ | 18,012 | $ | 29,352 | $ | 42,827 | $ | 57,577 | ||||||||
Interest and other income | 1,499 | — | 1,818 | — | ||||||||||||
Asset management and other fees to related parties | (3,737 | ) | (5,504 | ) | (8,986 | ) | (11,114 | ) | ||||||||
Interest expense | (2,014 | ) | (6,511 | ) | (5,477 | ) | (12,960 | ) | ||||||||
General and administrative | (1,021 | ) | (1,427 | ) | (2,138 | ) | (3,435 | ) | ||||||||
Transaction costs | (216 | ) | (344 | ) | (260 | ) | (344 | ) | ||||||||
Depreciation and amortization | (7,185 | ) | (13,325 | ) | (16,815 | ) | (26,473 | ) | ||||||||
Loss on early extinguishment of debt | (4,911 | ) | — | (29,982 | ) | — | ||||||||||
Impairment of real estate | (2,800 | ) | — | (69,000 | ) | — | ||||||||||
Gain on sale of real estate | 55,221 | — | 432,802 | — | ||||||||||||
Income before provision for income taxes | 52,848 | 2,241 | 344,789 | 3,251 | ||||||||||||
Provision for income taxes | (281 | ) | (292 | ) | (599 | ) | (680 | ) | ||||||||
Net income | 52,567 | 1,949 | 344,190 | 2,571 | ||||||||||||
Net (income) loss attributable to noncontrolling interests | (1 | ) | (12 | ) | 173 | (16 | ) | |||||||||
Net income attributable to the Company | $ | 52,566 | $ | 1,937 | $ | 344,363 | $ | 2,555 |
June 30, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Condensed assets: | ||||||||
Office (1) | $ | 643,226 | $ | 1,094,269 | ||||
Hotel | 107,042 | 105,845 | ||||||
Lending | 85,873 | 97,465 | ||||||
Non-segment assets | 360,362 | 44,822 | ||||||
Total assets | $ | 1,196,503 | $ | 1,342,401 |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Capital expenditures (2): | ||||||||
Office (1) | $ | 4,363 | $ | 10,040 | ||||
Hotel | 1,157 | 824 | ||||||
Total capital expenditures | 5,520 | 10,864 | ||||||
Loan originations | 18,523 | 28,460 | ||||||
Total capital expenditures and loan originations | $ | 24,043 | $ | 39,324 |
(1) | The June 30, 2019 balances include the assets of 899, 999 and 901 N Capitol Street, which are classified as held for sale on our consolidated balance sheet at June 30, 2019 (Note 3). The December 31, 2018 balances include the assets of 260 Townsend Street, which was classified as held for sale on our consolidated balance sheet at December 31, 2018 (Note 3). |
(2) | Represents additions and improvements to real estate investments, excluding acquisitions. Includes the activity for dispositions through their respective disposition dates. |
As of June 30, | ||||||||
2019 | 2018 | |||||||
Occupancy (1)(2)(3) | 88.1 | % | 94.0 | % | ||||
Annualized rent per occupied square foot (1)(2)(3)(4) | $ | 48.94 | $ | 44.54 |
(1) | As part of the Asset Sale, the Company has sold certain properties as described above in "—Program to Unlock Embedded Value in Our Portfolio and Improve Trading Liquidity of Our Common Stock—Sale of Assets." The information presented in this table represents historical information without giving effect to the Asset Sale. |
(2) | We sold six office properties and one parking garage during the six months ended June 30, 2019. Excluding these properties, the occupancy and annualized rent per occupied square foot were 88.1% and $48.94 as of June 30, 2019 and 92.7% and $45.27 as of June 30, 2018. |
(3) | 899 and 999 N Capitol Street were classified as held for sale as of June 30, 2019. Excluding these properties and the properties noted in (2), the occupancy and annualized rent per occupied square foot were 88.1% and $47.62 as of June 30, 2019, and 95.0% and $43.22 as of June 30, 2018. |
(4) | Represents gross monthly base rent under leases commenced as of the specified periods, multiplied by twelve. This amount reflects total cash rent before abatements. Total abatements for the twelve months ended June 30, 2019 and 2018 were approximately $2,039,000 and $3,981,000, respectively. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail. |
For the Three Months Ended | ||||||||||||||||
September 30, 2019 | December 31, 2019 | March 31, 2020 | June 30, 2020 | |||||||||||||
Expiring Cash Rent (1): | ||||||||||||||||
Expiring square feet (2) | 50,894 | 14,861 | 21,878 | 48,069 | ||||||||||||
Expiring rent per square foot (3) | $ | 39.45 | $ | 47.84 | $ | 40.86 | $ | 57.71 |
(1) | As part of the Asset Sale, the Company has sold certain properties as described above in "—Program to Unlock Embedded Value in Our Portfolio and Improve Trading Liquidity of Our Common Stock—Sale of Assets." The information presented in this table reflects the properties we owned at June 30, 2019, except for 899 and 999 N Capitol Street, which are classified as held for sale on our consolidated balance sheet at such time. |
(2) | Month-to-month tenants occupying a total of 32,743 square feet are included in the expiring leases in the first quarter listed. |
(3) | Represents gross monthly base rent, as of June 30, 2019, under leases expiring during the periods above, multiplied by twelve. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. Annualized rent for certain office properties includes rent attributable to retail. |
Number of Leases (1) | Rentable Square Feet | New Cash Rent per Square Foot (2) | Expiring Cash Rent per Square Foot (2) | |||||||||
Three months ended June 30, 2019 | 4 | 17,821 | $ | 26.80 | $ | 25.29 | ||||||
Six months ended June 30, 2019 | 10 | 50,397 | $ | 38.27 | $ | 32.61 |
(1) | Based on the number of tenants that signed leases. |
(2) | Cash rent represents gross monthly base rent, multiplied by twelve. This amount reflects total cash rent before abatements. Where applicable, annualized rent has been grossed up by adding annualized expense reimbursements to base rent. |
For the Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Occupancy | 81.9 | % | 84.1 | % | ||||
ADR | $ | 172.12 | $ | 167.83 | ||||
RevPAR | $ | 140.93 | $ | 141.10 |
Three Months Ended June 30, | Change | ||||||||||||||
2019 | 2018 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Total revenues | $ | 36,856 | $ | 51,544 | $ | (14,688 | ) | (28.5 | )% | ||||||
Total expenses | 39,229 | 49,303 | (10,074 | ) | (20.4 | )% | |||||||||
Gain on sale of real estate | 55,221 | — | 55,221 | — | |||||||||||
Net income | 52,567 | 1,949 | 50,618 | — |
Three Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Net income (loss) attributable to common stockholders | $ | 48,260 | $ | (1,876 | ) | |||
Depreciation and amortization | 7,185 | 13,325 | ||||||
Impairment of real estate | 2,800 | — | ||||||
Gain on sale of depreciable assets (1) | (55,221 | ) | — | |||||
FFO attributable to common stockholders | $ | 3,024 | $ | 11,449 |
(1) | In connection with the sale of a property during the three months ended June 30, 2019, we recognized a $4,911,000 loss on early extinguishment of debt related to the legal defeasance of a mortgage loan collateralized by such property. Such loss on early extinguishment of debt is not included in the adjustment for the gain on sale of depreciable assets presented in the table above. |
Three Months Ended June 30, | Change | ||||||||||||||
2019 | 2018 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Revenues: | |||||||||||||||
Office | $ | 22,050 | $ | 37,889 | $ | (15,839 | ) | (41.8 | )% | ||||||
Hotel | 10,330 | 10,947 | (617 | ) | (5.6 | )% | |||||||||
Lending | 2,977 | 2,708 | 269 | 9.9 | % | ||||||||||
Expenses: | |||||||||||||||
Office | 9,115 | 14,026 | (4,911 | ) | (35.0 | )% | |||||||||
Hotel | 6,808 | 6,837 | (29 | ) | (0.4 | )% | |||||||||
Lending | 1,422 | 1,329 | 93 | 7.0 | % |
Six Months Ended June 30, | Change | ||||||||||||||
2019 | 2018 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Total revenues | $ | 84,133 | $ | 99,838 | $ | (15,705 | ) | (15.7 | )% | ||||||
Total expenses | 172,146 | 96,587 | 75,559 | 78.2 | % | ||||||||||
Gain on sale of real estate | 432,802 | — | 432,802 | — | |||||||||||
Net income | 344,190 | 2,571 | 341,619 | — |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Net income (loss) attributable to common stockholders | $ | 335,891 | $ | (4,902 | ) | |||
Depreciation and amortization | 16,815 | 26,473 | ||||||
Impairment of real estate | 69,000 | — | ||||||
Gain on sale of depreciable assets (1) | (432,802 | ) | — | |||||
FFO attributable to common stockholders | $ | (11,096 | ) | $ | 21,571 |
(1) | In connection with the sale of certain properties during the six months ended June 30, 2019, we recognized a $29,982,000 loss on early extinguishment of debt related to the legal defeasance and prepayment of mortgage loans collateralized by such properties. Such loss on early extinguishment of debt is not included in the adjustment for the gain on sale of depreciable assets presented in the table above. |
Six Months Ended June 30, | Change | ||||||||||||||
2019 | 2018 | $ | % | ||||||||||||
(dollars in thousands) | |||||||||||||||
Revenues: | |||||||||||||||
Office | $ | 55,495 | $ | 72,701 | $ | (17,206 | ) | (23.7 | )% | ||||||
Hotel | 20,919 | 21,438 | (519 | ) | (2.4 | )% | |||||||||
Lending | 5,901 | 5,699 | 202 | 3.5 | % | ||||||||||
Expenses: | |||||||||||||||
Office | 22,828 | 26,290 | (3,462 | ) | (13.2 | )% | |||||||||
Hotel | 13,516 | 13,388 | 128 | 1.0 | % | ||||||||||
Lending | 3,144 | 2,583 | 561 | 21.7 | % |
Payments Due by Period | |||||||||||||||||||
Contractual Obligations (1) | Total | 2019 | 2020 - 2021 | 2022 - 2023 | Thereafter | ||||||||||||||
(in thousands) | |||||||||||||||||||
Debt: | |||||||||||||||||||
Mortgage payable | $ | 97,100 | $ | — | $ | — | $ | — | $ | 97,100 | |||||||||
Other (2) (3) | 54,442 | 943 | 3,913 | 4,128 | 45,458 | ||||||||||||||
Secured borrowings (3) | 15,304 | 281 | 1,200 | 1,336 | 12,487 | ||||||||||||||
Interest and fees: | |||||||||||||||||||
Debt (4) | 68,935 | 4,081 | 16,031 | 14,871 | 33,952 | ||||||||||||||
Other Contractual Obligations: | |||||||||||||||||||
Borrower advances | 3,549 | 3,549 | — | — | — | ||||||||||||||
Loan commitments | 7,607 | 7,607 | — | — | — | ||||||||||||||
Tenant improvements | 9,716 | 6,381 | 323 | 1,608 | 1,404 | ||||||||||||||
Operating leases | 234 | 128 | 106 | — | — | ||||||||||||||
Total contractual obligations | $ | 256,887 | $ | 22,970 | $ | 21,573 | $ | 21,943 | $ | 190,401 |
(1) | Excludes contractual obligations related to 899, 999 and 901 N Capitol Street, which are classified as held for sale as of June 30, 2019. |
(2) | Represents the junior subordinated notes and SBA 7(a) loan-backed notes. |
(3) | Principal payments on SBA 7(a) loan-backed notes, which are included in Other, and secured borrowings are generally dependent upon cash flows received from the underlying loans. Our estimate of their repayment is based on scheduled payments on the underlying loans. Our estimate will differ from actual amounts to the extent we experience prepayments and or loan liquidations or charge-offs. No payment is due unless payments are received from the borrowers on the underlying loans. |
(4) | Excludes premiums and discounts. For the mortgage payable and junior subordinated notes, the interest expense is calculated based on the effective interest rate on the related debt. For our revolving credit facility, we use the balance outstanding and the applicable rates in effect at June 30, 2019 to calculate the unused commitment fees. For our secured borrowings related to our government guaranteed loans, we use the variable rate in effect at June 30, 2019. |
Declaration Date | Payment Date | Number of Shares | Cash Dividends Declared | |||||
(in thousands) | ||||||||
June 4, 2019 | July 15, 2019 | 3,601,721 | $ | 1,150 | ||||
February 20, 2019 | April 15, 2019 | 3,149,924 | $ | 1,010 |
Accumulation Period | Dividends | |||||||
Start Date | End Date | Number of Shares | Accumulated | |||||
(in thousands) | ||||||||
April 1, 2019 | June 30, 2019 | 8,080,740 | $ | 3,152 | ||||
January 1, 2019 | March 31, 2019 | 8,080,740 | $ | 3,152 |
Declaration Date | Payment Date | Type | Cash Dividend Per Common Share | |||||
June 4, 2019 | June 27, 2019 | Regular Quarterly | $ | 0.12500 | ||||
February 20, 2019 | March 25, 2019 | Regular Quarterly | $ | 0.12500 |
Exhibit Number | Exhibit Description | |
10.1 | Amendment, Assignment and Assumption Agreement, dated as of May 31, 2019, by and among CIM Commercial Trust Corporation, International Assets Advisory, LLC and CCO Capital, LLC (incorporated by reference to Exhibit 1.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 31, 2019). | |
10.2 | Purchase and Sale Agreement, dated as of June 18, 2019, by and among Union Square 941 Property LP, Union Square 825 Property LP, Union Square Plaza Owner LP and Network Realty Partners, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 5, 2019). | |
*31.1 | Section 302 Officer Certification—Chief Executive Officer. | |
*31.2 | Section 302 Officer Certification—Chief Financial Officer. | |
*32.1 | Section 906 Officer Certification—Chief Executive Officer. | |
*32.2 | Section 906 Officer Certification—Chief Financial Officer. | |
*101 | Interactive data files pursuant to Rule 405 of Regulation S-T. |
Exhibit Number | Exhibit Description | |
10.1 | ||
10.2 | ||
*31.1 | ||
*31.2 | ||
*32.1 | ||
*32.2 | ||
*101 | Interactive data files pursuant to Rule 405 of Regulation S-T. |
CIM COMMERCIAL TRUST CORPORATION | ||||
Dated: August 8, 2019 | By: | /s/ DAVID THOMPSON David Thompson Chief Executive Officer | ||
Dated: August 8, 2019 | By: | /s/ NATHAN D. DEBACKER Nathan D. DeBacker Chief Financial Officer |
Date: August 8, 2019 | /s/ DAVID THOMPSON David Thompson Chief Executive Officer |
Date: August 8, 2019 | /s/ NATHAN D. DEBACKER Nathan D. DeBacker Chief Financial Officer |
/s/ DAVID THOMPSON David Thompson Chief Executive Officer August 8, 2019 |
/s/ NATHAN D. DEBACKER Nathan D. DeBacker Chief Financial Officer August 8, 2019 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Aug. 06, 2019 |
|
Document and Entity Information | ||
Entity Registrant Name | CIM Commercial Trust Corp | |
Entity Central Index Key | 0000908311 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 43,806,721 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 |
Consolidated Statements of Operations - USD ($) shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
REVENUES: | ||||
Rental and other property income | $ 22,419,000 | $ 37,825,000 | $ 56,000,000 | $ 72,969,000 |
Hotel income | 9,549,000 | 10,160,000 | 19,353,000 | 19,849,000 |
Interest and other income | 4,888,000 | 3,559,000 | 8,780,000 | 7,020,000 |
REVENUES | 36,856,000 | 51,544,000 | 84,133,000 | 99,838,000 |
EXPENSES: | ||||
Rental and other property operating | 15,658,000 | 20,765,000 | 35,911,000 | 38,681,000 |
Asset management and other fees to related parties | 4,288,000 | 6,143,000 | 10,174,000 | 12,354,000 |
Interest | 2,550,000 | 6,811,000 | 6,595,000 | 13,444,000 |
General and administrative | 1,621,000 | 1,915,000 | 3,409,000 | 5,291,000 |
Transaction costs | 216,000 | 344,000 | 260,000 | 344,000 |
Depreciation and amortization | 7,185,000 | 13,325,000 | 16,815,000 | 26,473,000 |
Loss on early extinguishment of debt (Note 7) | 4,911,000 | 0 | 29,982,000 | 0 |
Impairment of real estate (Note 3) | 2,800,000 | 0 | 69,000,000 | 0 |
EXPENSES | 39,229,000 | 49,303,000 | 172,146,000 | 96,587,000 |
Gain on sale of real estate (Note 3) | 55,221,000 | 0 | 432,802,000 | 0 |
INCOME BEFORE PROVISION FOR INCOME TAXES | 52,848,000 | 2,241,000 | 344,789,000 | 3,251,000 |
Provision for income taxes | 281,000 | 292,000 | 599,000 | 680,000 |
NET INCOME | 52,567,000 | 1,949,000 | 344,190,000 | 2,571,000 |
Net (income) loss attributable to noncontrolling interests | (1,000) | (12,000) | 173,000 | (16,000) |
NET INCOME ATTRIBUTABLE TO THE COMPANY | 52,566,000 | 1,937,000 | 344,363,000 | 2,555,000 |
Redeemable preferred stock dividends declared or accumulated (Note 10) | (4,302,000) | (3,814,000) | (8,464,000) | (7,459,000) |
Redeemable preferred stock redemptions (Note 10) | (4,000) | (8,000) | ||
Redeemable preferred stock redemptions (Note 10) | 1,000 | 2,000 | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ 48,260,000 | $ (1,876,000) | $ 335,891,000 | $ (4,902,000) |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS PER SHARE: | ||||
Basic (in usd per share) | $ 1.10 | $ (0.04) | $ 7.67 | $ (0.11) |
Diluted (in usd per share) | $ 1.07 | $ (0.04) | $ 7.36 | $ (0.11) |
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: | ||||
Basic (in shares) | 43,791 | 43,791 | 43,793 | 43,788 |
Diluted (in shares) | 45,853 | 43,791 | 45,804 | 43,788 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 52,567 | $ 1,949 | $ 344,190 | $ 2,571 |
Other comprehensive income (loss): cash flow hedges | 0 | (1,806) | ||
Other comprehensive income (loss): cash flow hedges | 407 | 1,590 | ||
COMPREHENSIVE INCOME | 52,567 | 2,356 | 342,384 | 4,161 |
Comprehensive (income) loss attributable to noncontrolling interests | (1) | (12) | 173 | (16) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $ 52,566 | $ 2,344 | $ 342,557 | $ 4,145 |
Consolidated Statements of Equity (Parenthetical) - $ / shares |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Common dividends (in usd per share) | $ 0.125 | $ 0.125 | $ 0.125 | $ 0.125 |
Dividends to holders of Series A Preferred Stock (in usd per share) | $ 0.34375 | $ 0.34375 | $ 0.34375 | $ 0.34375 |
ORGANIZATION AND OPERATIONS |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND OPERATIONS | ORGANIZATION AND OPERATIONS CIM Commercial Trust Corporation ("CIM Commercial" or the "Company"), a Maryland corporation and real estate investment trust ("REIT"), together with its wholly-owned subsidiaries ("we," "us" or "our") primarily acquires, owns, and operates Class A and creative office assets in vibrant and improving metropolitan communities throughout the United States. These communities are located in areas that include traditional downtown areas and suburban main streets, which have high barriers to entry, high population density, positive population trends and a propensity for growth. We were originally organized in 1993 as PMC Commercial Trust ("PMC Commercial"), a Texas real estate investment trust. On July 8, 2013, PMC Commercial entered into a merger agreement with CIM Urban REIT, LLC ("CIM REIT"), an affiliate of CIM Group, L.P. ("CIM Group" or "CIM"), and subsidiaries of the respective parties. CIM REIT was a private commercial REIT and was the owner of CIM Urban Partners, L.P. ("CIM Urban"). The merger was completed on March 11, 2014 (the "Acquisition Date"). Our common stock, $0.001 par value per share ("Common Stock"), is currently traded on the Nasdaq Global Market ("Nasdaq"), under the ticker symbol "CMCT", and on the Tel Aviv Stock Exchange (the "TASE"), under the ticker symbol "CMCT-L." Our Series L preferred stock, $0.001 par value per share ("Series L Preferred Stock"), is currently traded on Nasdaq and on the TASE, in each case under the ticker symbol "CMCTP." We have authorized for issuance 900,000,000 shares of common stock and 100,000,000 shares of preferred stock ("Preferred Stock"). On August 8, 2019, the Registrant announced a 1-for-3 reverse stock split on its common stock, to be effective on September 3, 2019 (the "Reverse Stock Split"). Unless otherwise stated, none of the share or per share amounts in this report reflect the effect of the Reverse Stock Split. CIM Commercial has qualified and intends to continue to qualify as a REIT, as defined in the Internal Revenue Code of 1986, as amended. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES For more information regarding our significant accounting policies and estimates, please refer to "Basis of Presentation and Summary of Significant Accounting Policies" contained in Note 2 to our consolidated financial statements for the year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 18, 2019. Interim Financial Information—The accompanying interim consolidated financial statements of CIM Commercial have been prepared by our management in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial information reflects all adjustments which are, in the opinion of our management, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Our accompanying interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto, included in our Annual Report on Form 10-K filed with the SEC on March 18, 2019. Principles of Consolidation—The consolidated financial statements include the accounts of CIM Commercial and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Investments in Real Estate—Real estate acquisitions are recorded at cost as of the acquisition date. Costs related to the acquisition of properties were expensed as incurred for acquisitions that occurred prior to October 1, 2017. For any acquisition occurring on or after October 1, 2017, we have conducted and will conduct an analysis to determine if the acquisition constitutes a business combination or an asset purchase. If the acquisition constitutes a business combination, then the transaction costs will be expensed as incurred, and if the acquisition constitutes an asset purchase, then the transaction costs will be capitalized. Investments in real estate are stated at depreciated cost. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:
We capitalize project costs, including pre-construction costs, interest expense, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, or construction of a project, while activities are ongoing to prepare an asset for its intended use. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Ordinary repairs and maintenance are expensed as incurred. Investments in real estate are evaluated for impairment on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The estimated fair value of the asset group identified for step two of the impairment testing under GAAP is based on either the income approach, with market discount rate, terminal capitalization rate and rental rate assumptions being most critical to such analysis, or on the sales comparison approach to similar properties. Assets held for sale are reported at the lower of the asset's carrying amount or fair value, less costs to sell. For the three and six months ended June 30, 2019, we recognized impairment of long-lived assets of $2,800,000 and $69,000,000, respectively (Note 3). For the three and six months ended June 30, 2018, we recognized no impairment of long-lived assets. Derivative Financial Instruments—As part of risk management and operational strategies, from time to time, we may enter into derivative contracts with various counterparties. All derivatives are recognized on the balance sheet at their estimated fair value. On the date that we enter into a derivative contract, we designate the derivative as a fair value hedge, a cash flow hedge, a foreign currency fair value or cash flow hedge, a hedge of a net investment in a foreign operation, or a trading or non-hedging instrument. Changes in the estimated fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge, to the extent that the hedge is effective, are initially recorded in other comprehensive income ("OCI"), and are subsequently reclassified into earnings as a component of interest expense when the variability of cash flows of the hedged transaction affects earnings (e.g., when periodic settlements of a variable-rate asset or liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the changes in the estimated fair value of the derivative differ from the variability in the cash flows of the forecasted transaction) is recognized in current-period earnings as a component of interest expense. When an interest rate swap designated as a cash flow hedge no longer qualifies for hedge accounting, we recognize changes in the estimated fair value of the hedge previously deferred to accumulated other comprehensive income ("AOCI"), along with any changes in estimated fair value occurring thereafter, through earnings. We classify cash flows from interest rate swap agreements as net cash provided by operating activities on the consolidated statements of cash flows as our accounting policy is to present the cash flows from the hedging instruments in the same category in the consolidated statements of cash flows as the category for the cash flows from the hedged items. See Note 12 for disclosures about our derivative financial instruments and hedging activities. Revenue Recognition—We use a five-step model to recognize revenue for contracts with customers. The five-step model requires that we (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation. Revenue from leasing activities We operate as a lessor of real estate assets, primarily in Class A and creative office assets. In determining whether our contracts with our tenants constitute leases, we determined that our contracts explicitly identify the premises and that any substitution rights to relocate the tenant to other premises within the same building stated in the contract are not substantive. Additionally, so long as payments are made timely under these contracts, our tenants have the right to obtain substantially all the economic benefits from the use of this identified asset and can direct how and for what purpose the premises are used to conduct their operations. Therefore, our contracts with our tenants constitute leases. All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is considered the owner of the improvements, any tenant improvement allowance that is funded is treated as an incentive. Lease incentives paid to tenants are included in other assets and amortized as a reduction to rental revenue on a straight-line basis over the term of the related lease. Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance, and other recoverable costs, are recognized as revenue in the period the expenses are incurred. Tenant reimbursements are recognized and presented on a gross basis when we are primarily responsible for fulfilling the promise to provide the specified good or service and control that specified good or service before it is transferred to the tenant. We have elected not to separate lease and non-lease components as the pattern of revenue recognition does not differ for the two components, and the non-lease component is not the primary component in our leases. In addition to minimum rents, certain leases provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Percentage rent is recognized once lessees’ specified sales targets have been met. We derive parking revenues from leases with third-party operators. Our parking leases provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Parking percentage rent is recognized once lessees’ specific sales targets have been met. For the three and six months ended June 30, 2019 and 2018, we recognized rental income as follows:
Revenue from lending activities Interest income included in interest and other income is comprised of interest earned on loans and our short-term investments and the accretion of net loan origination fees and discounts. Interest income on loans is accrued as earned with the accrual of interest suspended when the related loan becomes a Non-Accrual Loan (as defined below). Revenue from hotel activities Hotel revenue is recognized upon establishment of a contract with a customer. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. Various performance obligations of hotel revenues can be categorized as follows:
Cancellable reservations represent a single performance obligation of providing lodging services at the hotel. The Company satisfies its performance obligation and recognizes revenues associated with these reservations over time as services are rendered to the customer. The Company satisfies its performance obligation and recognizes revenues associated with noncancelable reservations at the earlier of (i) the date on which the customer cancels the reservation or (ii) over time as services are rendered to the customer. Ancillary services include facilities usage and providing food and beverage. The Company satisfies its performance obligation and recognizes revenues associated with these services at a point in time as the good or service is delivered to the customer. At inception of these contracts with customers for hotel revenues, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate. We recognized hotel income of $9,549,000 and $10,160,000 for the three months ended June 30, 2019 and 2018, respectively, and $19,353,000 and $19,849,000 for the six months ended June 30, 2019 and 2018, respectively. Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 18:
Tenant recoveries outside of the lease agreements Tenant recoveries outside of the lease agreements are related to construction projects in which our tenants have agreed to fully reimburse us for all costs related to construction. These services include architectural, permit expediter and construction services. At inception of the contract with the customer, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate. While these individual services are distinct, in the context of the arrangement with the customer, all of these services are bundled together and represent a single package of construction services requested by the customer. The Company satisfies its performance obligation and recognizes revenues associated with these services over time as the construction is completed. Amounts recognized for tenant recoveries outside of the lease agreements were $0 and $275,000 for the three months ended June 30, 2019 and 2018, respectively, and $205,000 and $278,000 for the six months ended June 30, 2019 and 2018, respectively, which are included in interest and other income on the consolidated statements of operations. As of June 30, 2019, there were no remaining performance obligations associated with tenant recoveries outside of the lease agreements. Loans Receivable—Our loans receivable are carried at their unamortized principal balance less unamortized acquisition discounts and premiums, retained loan discounts and loan loss reserves. For loans originated under the Small Business Administration's ("SBA") 7(a) Guaranteed Loan Program ("SBA 7(a) Program"), we sell the portion of the loan that is guaranteed by the SBA. Upon sale of the SBA guaranteed portion of the loans, which are accounted for as sales, the unguaranteed portion of the loan retained by us is valued on a fair value basis and a discount is recorded as a reduction in basis of the retained portion of the loan. Unamortized retained loan discounts were $7,557,000 and $7,234,000 as of June 30, 2019 and December 31, 2018, respectively. At the Acquisition Date, the carrying value of our loans was adjusted to estimated fair market value and acquisition discounts of $33,907,000 were recorded, which are being accreted to interest and other income using the effective interest method. We sold substantially all of our commercial mortgage loans with unamortized acquisition discounts of $15,951,000 to an unrelated third-party in December 2015. Acquisition discounts of $808,000 and $884,000 remained as of June 30, 2019 and December 31, 2018, respectively. A loan receivable is generally classified as non-accrual (a "Non-Accrual Loan") if (i) it is past due as to payment of principal or interest for a period of 60 days or more, (ii) any portion of the loan is classified as doubtful or is charged-off or (iii) the repayment in full of the principal and or interest is in doubt. Generally, loans are charged-off when management determines that we will be unable to collect any remaining amounts due under the loan agreement, either through liquidation of collateral or other means. Interest income, included in interest and other income, on a Non-Accrual Loan is recognized on either the cash basis or the cost recovery basis. On a quarterly basis, and more frequently if indicators exist, we evaluate the collectability of our loans receivable. Our evaluation of collectability involves judgment, estimates, and a review of the ability of the borrower to make principal and interest payments, the underlying collateral and the borrowers' business models and future operations in accordance with Accounting Standards Codification ("ASC") 450-20, Contingencies—Loss Contingencies, and ASC 310-10, Receivables. For the three and six months ended June 30, 2019, we recorded $1,000 and $58,000, respectively, of impairment on our loans receivable. For the three and six months ended June 30, 2018, we recorded no impairment on our loans receivable. We establish a general loan loss reserve when available information indicates that it is probable a loss has occurred based on the carrying value of the portfolio and the amount of the loss can be reasonably estimated. Significant judgment is required in determining the general loan loss reserve, including estimates of the likelihood of default and the estimated fair value of the collateral. The general loan loss reserve includes those loans, which may have negative characteristics which have not yet become known to us. In addition to the reserves established on loans not considered impaired that have been evaluated under a specific evaluation, we establish the general loan loss reserve using a consistent methodology to determine a loss percentage to be applied to loan balances. These loss percentages are based on many factors, primarily cumulative and recent loss history and general economic conditions. Deferred Rent Receivable and Charges—Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 10) and other deferred costs. Deferred rent receivable is $18,531,000 and $52,366,000 at June 30, 2019 and December 31, 2018, respectively. Deferred leasing costs, which represent lease commissions and other direct costs associated with the acquisition of tenants, are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred leasing costs of $16,588,000 and $51,152,000 are presented net of accumulated amortization of $6,775,000 and $23,910,000 at June 30, 2019 and December 31, 2018, respectively. Deferred offering costs represent direct costs incurred in connection with our offering of Series A Preferred Units (as defined in Note 10), excluding costs specifically identifiable to a closing, such as commissions, dealer-manager fees, and other offering fees and expenses. For a specific issuance of Series A Preferred Units, issuance-specific offering costs are recorded as a reduction of proceeds raised on the issuance date. Offering costs incurred but not directly related to a specifically identifiable closing are deferred. Deferred offering costs are first allocated to each issuance on a pro-rata basis equal to the ratio of Series A Preferred Units issued in an issuance to the maximum number of Series A Preferred Units that are expected to be issued. Then, the issuance-specific offering costs and the deferred offering costs allocated to such issuance are further allocated to the Series A Preferred Stock (as defined in Note 10) and Series A Preferred Warrants (as defined in Note 10) issued in such issuance based on the relative fair value of the instruments on the date of issuance. The deferred offering costs allocated to the Series A Preferred Stock and Series A Preferred Warrants are reductions to temporary equity and permanent equity, respectively. Deferred offering costs of $4,610,000 and $4,213,000 related to our offering of Series A Preferred Units are included in deferred rent receivable and charges at June 30, 2019 and December 31, 2018, respectively. Other deferred costs are $204,000 and $409,000 at June 30, 2019 and December 31, 2018, respectively. Redeemable Preferred Stock—Beginning on the date of original issuance of any given shares of Series A Preferred Stock (Note 10), the holder of such shares has the right to require the Company to redeem such shares at a redemption price of 100% of the Series A Preferred Stock Stated Value (as defined in Note 10), plus accrued and unpaid dividends, subject to the payment of a redemption fee until the fifth anniversary of such issuance. From and after the fifth anniversary of the date of the original issuance, the holder will have the right to require the Company to redeem such shares at a redemption price of 100% of the Series A Preferred Stock Stated Value, plus accrued and unpaid dividends, without a redemption fee, and the Company will have the right (but not the obligation) to redeem such shares at 100% of the Series A Preferred Stock Stated Value, plus accrued and unpaid dividends. The applicable redemption price payable upon redemption of any Series A Preferred Stock is payable in cash or, on or after the first anniversary of the issuance of such shares of Series A Preferred Stock to be redeemed, in the Company's sole discretion, in cash or in equal value through the issuance of shares of Common Stock, based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption. Since a holder of Series A Preferred Stock has the right to request redemption of such shares and redemptions prior to the first anniversary are to be paid in cash, we have recorded the activity related to our Series A Preferred Stock in temporary equity. We recorded the activity related to our Series A Preferred Warrants (Note 10) in permanent equity. On the first anniversary of the date of original issuance of a particular share of Series A Preferred Stock, we reclassify such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. Proceeds and expenses from the sale of the Series A Preferred Units are allocated to the Series A Preferred Stock and the Series A Preferred Warrants using their relative fair values on the date of issuance. From and after the fifth anniversary of the date of original issuance of the Series L Preferred Stock, each holder will have the right to require the Company to redeem, and the Company will also have the option to redeem (subject to certain conditions), such shares of Series L Preferred Stock at a redemption price equal to the Series L Preferred Stock Stated Value (as defined in Note 10), plus, provided certain conditions are met, all accrued and unpaid distributions. Notwithstanding the foregoing, a holder of shares of our Series L Preferred Stock may require us to redeem such shares at any time prior to the fifth anniversary of the date of original issuance of the Series L Preferred Stock if (1) we do not declare and pay in full the distributions on the Series L Preferred Stock for any annual period prior to such fifth anniversary or (2) we do not declare and pay all accrued and unpaid distributions on the Series L Preferred Stock for all past dividend periods prior to the applicable holder redemption date. The applicable redemption price payable upon redemption of any Series L Preferred Stock will be made, in the Company's sole discretion, in the form of (A) cash in Israeli new shekels ("ILS") at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) our net asset value ("NAV") per share of our Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of our Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and our Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively. We recorded the activity related to our Series L Preferred Stock in permanent equity. Noncontrolling Interests—Noncontrolling interests represent the interests in various properties owned by third parties. Restricted Cash—Our mortgage loan and hotel management agreements provide for depositing cash into restricted accounts reserved for capital expenditures, free rent, tenant improvement and leasing commission obligations. Restricted cash also includes cash required to be segregated in connection with certain of our loans receivable. Reclassifications—Certain prior period amounts have been reclassified to conform with the current period presentation. With the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) and the election of the lessor practical expedient not to separate lease and non-lease components, $2,940,000 and $4,391,000 of expense reimbursements were reclassified as rental and other property income on the consolidated statements of operations for the three and six months ended June 30, 2018, respectively, and $411,000 and $569,000 of non-lease component expense reimbursements recognized under the revenue recognition guidance were reclassified as interest and other income on the consolidated statements of operations for the three and six months ended June 30, 2018, respectively. Under the new leasing guidance, bad debt expense associated with changes in the collectability assessment for operating leases shall be recorded as adjustments to rental and other property income rather than rental and other property operating expenses. The impact of this reclassification resulted in a $15,000 and $119,000 reclassification from rental and other property expenses to rental and other property income on the consolidated statements of operations for the three and six months ended June 30, 2018, respectively. Assets Held for Sale and Discontinued Operations—In the ordinary course of business, we may periodically enter into agreements to dispose of our assets. Some of these agreements are non-binding because either they do not obligate either party to pursue any transactions until the execution of a definitive agreement or they provide the potential buyer with the ability to terminate without penalty or forfeiture of any material deposit, subject to certain specified contingencies, such as completion of due diligence at the discretion of such buyer. We do not classify assets that are subject to such non-binding agreements as held for sale. We classify assets as held for sale, if material, when they meet the necessary criteria, which include: a) management commits to and actively embarks upon a plan to sell the assets, b) the assets to be sold are available for immediate sale in their present condition, c) the sale is expected to be completed within one year under terms usual and customary for such sales and d) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. We generally believe that we meet these criteria when the plan for sale has been approved by our Board of Directors, there are no known significant contingencies related to the sale and management believes it is probable that the sale will be completed within one year. Assets held for sale are recorded at the lower of cost or estimated fair value less cost to sell. In addition, if we were to determine that the asset disposal associated with assets held for sale or disposed of represents a strategic shift, the revenues, expenses and net gain (loss) on dispositions would be recorded in discontinued operations for all periods presented through the date of the applicable disposition. Consolidation Considerations for Our Investments in Real Estate—ASC 810-10, Consolidation, addresses how a business enterprise should evaluate whether it has a controlling interest in an entity through means other than voting rights that would require the entity to be consolidated. We analyze our investments in real estate in accordance with this accounting standard to determine whether they are variable interest entities, and if so, whether we are the primary beneficiary. Our judgment with respect to our level of influence or control over an entity and whether we are the primary beneficiary of a variable interest entity involves consideration of various factors, including the form of our ownership interest, our voting interest, the size of our investment (including loans), and our ability to participate in major policy-making decisions. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in real estate on our consolidated financial statements. Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, 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 period. Actual results could differ from those estimates. Recently Issued Accounting Pronouncements—In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02, Leases (Topic 842), which is intended to improve financial reporting about leasing transactions. Under the new guidance, a lessee is required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with previous GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily depends on its classification as a finance or operating lease. However, unlike previous GAAP, which required a lessee to recognize only capital leases on the balance sheet, the new ASU requires a lessee to recognize both types of leases on the balance sheet. The lessor accounting remains largely unchanged from previous GAAP. However, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. In July 2018, the FASB issued ASU No. 2018-10, Leases (Topic 842), which contained targeted improvements to amend inconsistencies and clarify guidance that were brought about by stakeholders. Furthermore, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), which provided the following practical expedients to entities: (1) a transition method that allows entities to apply the new standard at the adoption date and to recognize a cumulative-effect adjustment to the opening balance of retained earnings effective at the adoption date; and (2) the option for lessors to not separate lease and non-lease components provided that certain criteria are met. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842), which provides lessors the option to elect to account for sales and other similar taxes in which the lessee directly pays third parties to be excluded from the measurement of the contract consideration. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842), which provided narrow amendments, including clarification on transition disclosures to certain aspects of ASU 2016-02. For public entities, these ASUs are effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. The guidance provides a package of transition practical expedients, which must be elected as a package and applied consistently by an entity to all of its leases (including those for which the entity is a lessee or a lessor) when applying this guidance to leases that commenced before the effective date of January 1, 2019: (1) An entity need not reassess whether any expired or existing contracts are or contain leases; (2) an entity need not reassess the lease classification for any expired or existing leases (that is, all leases that were classified as operating leases prior to January 1, 2019 remain classified as operating leases); and (3) an entity need not reassess initial direct costs for any existing leases. The Company has elected all the aforementioned transition practical expedients, including the expedients provided under ASU 2018-11. From a lessee's perspective, the Company has determined that there is one office lease for our lending segment that is material to the consolidated balance sheet. Based on our assessment, the lease has been classified as an operating lease and the Company recorded approximately $362,000 as a right-of-use asset and lease liability on the consolidated balance sheet on the effective date of January 1, 2019. As of June 30, 2019, the right-of-use asset and lease liability balance was approximately $234,000. From a lessor's perspective, the Company did not record a cumulative effect adjustment on January 1, 2019 as the aforementioned package of practical expedients allows us to continue accounting for our then-existing or expired leases under the previous accounting guidance, and we have and will apply the new lease accounting guidance to leases that commence or are modified after the effective date of January 1, 2019. Leases commenced or modified after the effective date have been, and we expect future commencements and modifications of leases in the future will continue to be, classified as operating leases and that we will qualify for the lessor practical expedient provided under ASU 2018-11 to not separate lease and non-lease components. Additionally, if following the effective date, our tenants have made or make payments for taxes or insurance directly to a third-party on behalf of the Company as the lessor, we have excluded and will exclude these amounts from the measurement of the contract consideration and consider these lessee costs. Otherwise, any recoveries of these costs are and will be recognized as lease revenue on a gross basis in our consolidated income statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. The amendments in the ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU No. 2018-19, Financial Instruments-Credit Losses (Topic 326): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified that receivables arising from operating leases are not within the scope of the credit losses standards. In April 2019, the FASB issued ASU 2019-04, Financial Instruments-Credit Losses (Topic 326): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified the following: (i) an entity’s estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (ii) an entity should consider contractual extension or renewal options that it cannot unconditionally cancel when determining the contractual term over which expected credit losses are measured. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which allows entities to irrevocably elect the fair value option for existing financial assets on an instrument-by-instrument basis upon adoption of ASU 2016-13. Except for existing held-to-maturity debt securities, the alternative is available for all instruments in the scope of ASC 326-20 that are eligible for the fair value option in ASC 825-10. If an entity elects the fair value option, it will recognize a cumulative-effect adjustment for the difference between the fair value of the instrument and its carrying value. For public entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2019. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which simplifies and expands the eligible hedging strategies for financial and nonfinancial risks by more closely aligning hedge accounting with a company’s risk management activities, and also simplifies the application of Topic 815, Derivatives and Hedging, through targeted improvements in key practice areas. In addition, the ASU prescribes how hedging results should be presented and requires incremental disclosures. Further, the ASU provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings in the current period. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018. The Company has evaluated the guidance and determined that the effects of ASU 2017-12 do not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public entities will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2019. Early adoption is permitted in any interim period after issuance of the ASU. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (the “SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The guidance permits the use of the OIS rate based on the SOFR as a U.S. benchmark rate for purposes of applying hedge accounting. The SOFR is a volume-weighted median interest rate that is calculated daily based on overnight transactions from the prior day’s activity in specified segments of the U.S. Treasury repo market. It has been selected as the preferred replacement for the U.S. dollar London Interbank Offered Rate ("LIBOR"), which will be phased out by the end of 2021. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2019. Early adoption is permitted in any interim period after issuance of the ASU. The Company has evaluated the guidance and determined that the effects of ASU 2018-16 do not have a material impact on our consolidated financial statements. |
ACQUISITIONS AND DISPOSITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DISPOSITIONS | ACQUISITIONS AND DISPOSITIONS The fair value of real estate acquired is recorded to the acquired tangible assets, consisting primarily of land, land improvements, building and improvements, tenant improvements, and furniture, fixtures, and equipment, and identified intangible assets and liabilities, consisting of the value of acquired above-market and below-market leases, in-place leases and ground leases, if any, based in each case on their respective fair values. Loan premiums, in the case of above-market rate loans, or loan discounts, in the case of below-market rate loans, are recorded based on the fair value of any loans assumed in connection with acquiring the real estate. 2019 Transactions—There were no acquisitions during the six months ended June 30, 2019. We sold 100% fee-simple interests in the following properties to unrelated third-parties during the six months ended June 30, 2019. Transaction costs related to these sales were expensed as incurred.
The results of operations of the properties we sold have been included in the consolidated statements of operations through each property's respective disposition date. The following is the detail of the carrying amounts of assets and liabilities at the time of the sales of the properties that occurred during the six months ended June 30, 2019:
2018 Transactions—On January 18, 2018, we acquired a 100% fee-simple interest in an office property known as 9460 Wilshire Boulevard from an unrelated third-party. The property has approximately 68,866 square feet of office space and 22,884 square feet of retail space and is located in Beverly Hills, California. The acquisition was funded with proceeds from our Series L Preferred Stock offering, and the acquired property is reported as part of the office segment (Note 18). We performed an analysis and, based on our analysis, we determined this acquisition was an asset purchase and not a business combination. As such, transaction costs were capitalized as incurred in connection with this acquisition.
The results of operations of the property we acquired during the six months ended June 30, 2018 have been included in the consolidated statements of operations from the date of acquisition. The purchase price of the acquisition completed during the six months ended June 30, 2018 was less than 10% of our total assets as of the most recent annual consolidated financial statements filed at or prior to the date of acquisition. The fair value of the net assets acquired for the aforementioned acquisition during the six months ended June 30, 2018 are as follows:
There were no dispositions during the six months ended June 30, 2018. Assets Held for Sale As noted above, in March 2019, we sold a 100% fee-simple interest in an office property located at 260 Townsend Street in San Francisco, California to an unrelated third-party. The office property had been classified as held for sale as of December 31, 2018, as the purchase and sale agreement was entered into and became subject to a non-refundable deposit prior to December 31, 2018. In connection with our negotiation of an agreement with an unrelated third-party for the sale of 100% fee-simple interests in two office properties located at 899 and 999 N Capitol Street and one development site located at 901 N Capitol Street, all in Washington, D.C., we determined that the book values of such properties exceeded their estimated fair values and recognized an impairment charge of $66,200,000 during the three months ended March 31, 2019 under the held-and-used impairment model. Following our signing the agreement for the sale of the aforementioned properties and our receipt of a non-refundable deposit in respect of their sale in June 2019, such properties were classified as held for sale as of June 30, 2019 and we recognized an additional impairment charge of $2,800,000 under the held-for-sale impairment model. As such, $2,800,000 and $69,000,000 was recognized during the three and six months ended June 30, 2019, respectively. Our determination of the fair values of these properties was based on negotiations with the third-party buyer and the contract sales price. The sale of such properties closed in July 2019 and we expect to recognize a gain on sale of approximately $200,000. The following is the detail of the carrying amounts of assets and liabilities for the office properties that are classified as held for sale on our consolidated balance sheets as of June 30, 2019 and December 31, 2018:
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INVESTMENTS IN REAL ESTATE |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN REAL ESTATE | INVESTMENTS IN REAL ESTATE Investments in real estate consist of the following:
We recorded depreciation expense of $5,815,000 and $10,907,000 for the three months ended June 30, 2019 and 2018, respectively, and $13,752,000 and $21,586,000 for the six months ended June 30, 2019 and 2018, respectively. |
LOANS RECEIVABLE |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS RECEIVABLE | LOANS RECEIVABLE Loans receivable consist of the following:
SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds received from the transfer are reflected as loan-backed notes payable (Note 7). SBA 7(a) Loans Receivable, Subject to Credit Risk—Represents the unguaranteed portions of loans originated under the SBA 7(a) Program which were retained by the Company and the government guaranteed portions of such loans that have not yet been fully funded or sold. SBA 7(a) Loans Receivable, Subject to Secured Borrowings—Represents the government guaranteed portions of loans originated under the SBA 7(a) Program which were sold with the proceeds received from the sale reflected as secured borrowings—government guaranteed loans. There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal. At June 30, 2019 and December 31, 2018, 99.9% and 99.7%, respectively, of our loans subject to credit risk were current. We classify loans with negative characteristics in substandard categories ranging from special mention to doubtful. At June 30, 2019 and December 31, 2018, $584,000 and $235,000, respectively, of loans subject to credit risk were classified in substandard categories. At June 30, 2019 and December 31, 2018, our loans subject to credit risk were 98.7% and 98.3%, respectively, concentrated in the hospitality industry. |
OTHER INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INTANGIBLE ASSETS | OTHER INTANGIBLE ASSETS A schedule of our intangible assets and liabilities and related accumulated amortization and accretion as of June 30, 2019 and December 31, 2018 is as follows:
The amortization of the acquired above-market leases, which decreased rental and other property income, was $21,000 and $14,000 for the three months ended June 30, 2019 and 2018, respectively, and $42,000 and $26,000 for the six months ended June 30, 2019 and 2018, respectively. The amortization of the acquired in-place leases included in depreciation and amortization expense was $540,000 and $930,000 for the three months ended June 30, 2019 and 2018, respectively, and $1,141,000 and $1,842,000 for the six months ended June 30, 2019 and 2018, respectively. The amortization of the acquired below-market leases included in rental and other property income was $421,000 and $520,000 for the three months ended June 30, 2019 and 2018, respectively, and $934,000 and $1,233,000 for the six months ended June 30, 2019 and 2018, respectively. A schedule of future amortization and accretion of acquisition related intangible assets and liabilities as of June 30, 2019, is as follows:
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Information on our debt is as follows:
The mortgages payable are secured by deeds of trust on certain of the properties and assignments of rents. The junior subordinated notes may be redeemed at par at our option. Secured borrowings—government guaranteed loans represent sold loans which are treated as secured borrowings because the loan sales did not meet the derecognition criteria provided for in ASC 860-30, Secured Borrowing and Collateral. These loans included cash premiums that are amortized as a reduction to interest expense over the life of the loan using the effective interest method and are fully amortized when the underlying loan is repaid in full. SBA 7(a) loan-backed notes are secured by deeds of trust or mortgages. Deferred loan costs, which represent legal and third-party fees incurred in connection with our borrowing activities, are capitalized and amortized to interest expense on a straight-line basis over the life of the related loan, approximating the effective interest method. Deferred loan costs of $4,535,000 and $5,994,000 are presented net of accumulated amortization of $951,000 and $876,000 at June 30, 2019 and December 31, 2018, respectively, and are a reduction to total debt. In September 2014, CIM Commercial entered into an $850,000,000 unsecured credit facility with a bank syndicate which consisted of a $450,000,000 revolver, a $325,000,000 term loan and a $75,000,000 delayed-draw term loan. Outstanding advances under the revolver bore interest at (i) the base rate plus 0.20% to 1.00% or (ii) LIBOR plus 1.20% to 2.00%, depending on the maximum consolidated leverage ratio. Outstanding advances under the term loans bore interest at (i) the base rate plus 0.15% to 0.95% or (ii) LIBOR plus 1.15% to 1.95%, depending on the maximum consolidated leverage ratio. Our unsecured credit facility matured on September 30, 2018. In May 2015, CIM Commercial entered into an unsecured term loan facility with a bank syndicate pursuant to which CIM Commercial could borrow up to a maximum of $385,000,000. Outstanding advances under the term loan facility bore interest at (i) the base rate plus 0.60% to 1.25% or (ii) LIBOR plus 1.60% to 2.25%, depending on the maximum consolidated leverage ratio, which interest rate was effectively converted to a fixed rate of 3.16% through interest rate swaps. The term loan facility had a maturity date in May 2022. On November 2, 2015, $385,000,000 was drawn under the term loan facility. Proceeds from the term loan facility were used to repay balances outstanding under our unsecured credit facility. During the year ended December 31, 2017, we repaid $215,000,000 of outstanding borrowings on our unsecured term loan facility. In connection with such paydowns, we wrote off deferred loan costs of $1,988,000 and related accumulated amortization of $705,000, a proportionate amount to the borrowings being repaid. On October 30, 2018, we repaid and terminated the $170,000,000 of outstanding borrowings on our unsecured term loan facility using proceeds from our new revolving credit facility (as described below). In connection with such paydown and termination, we wrote off the remaining deferred loan costs of $1,872,000 and related accumulated amortization of $1,064,000. In June 2016, we entered into six mortgage loan agreements with an aggregate principal amount of $392,000,000. A portion of the net proceeds from the loans was used to repay outstanding balances under our unsecured credit facility and the remaining portion was used to repurchase shares of our Common Stock in a private repurchase in September 2016. On September 21, 2017, in connection with the sale of an office property in Los Angeles, California, one mortgage loan with an outstanding principal balance of $21,700,000, collateralized by such property, was assumed by the buyer. On March 1, 2019, additional mortgage loans with an aggregate outstanding principal balance of $205,500,000 at such time, were legally defeased in connection with the sale of the related properties. The cash outlay required for the defeasance in the net amount of $224,086,000 was based on the purchase price of U.S. government securities that will generate sufficient cash flow to fund continued interest payments on the loans from the effective date of the defeasance through the date on which we could repay the loans at par. As a result of the defeasance, we recognized a loss on early extinguishment of debt of $0 and $19,290,000 for the three and six months ended June 30, 2019, respectively, which represents the sum of the difference between the purchase price of U.S. government securities of $224,086,000 and the aggregate outstanding principal balance of the mortgage loans of $205,500,000, the write-off of deferred loan costs of $637,000 and related accumulated amortization of $170,000, and transaction costs of $237,000. On March 14, 2019, in connection with the sale of an office property in San Francisco, California, one mortgage loan with an outstanding principal balance of $28,200,000 at such time was assumed by the buyer. As a result of this assumption, we recognized a loss on early extinguishment of debt of $0 and $178,000 for the three and six months ended June 30, 2019, respectively, which represents the write-off of deferred loan costs of $243,000 and related accumulated amortization of $65,000. On May 16, 2019, one mortgage loan with an outstanding principal balance of $39,500,000 at such time, was legally defeased in connection with the sale of the related property. The cash outlay required for the defeasance in the net amount of $44,108,000 was based on the purchase price of U.S. government securities that will generate sufficient cash flow to fund continued interest payments on the loan from the effective date of the defeasance through the date on which we could repay the loan at par. As a result of the defeasance, we recognized a loss on early extinguishment of debt of $4,911,000 for each of the three and six months ended June 30, 2019, which represents the sum of the difference between the purchase price of U.S. government securities of $44,108,000 and the outstanding principal balance of the mortgage loan of $39,500,000, the write-off of deferred loan costs of $287,000 and related accumulated amortization of $82,000, and transaction costs of $98,000. On May 30, 2018, we completed a securitization of the unguaranteed portion of certain of our SBA 7(a) loans receivable with the issuance of $38,200,000 of unguaranteed SBA 7(a) loan-backed notes. The securitization uses a trust formed for the benefit of the note holders (the "Trust") which is considered a variable interest entity ("VIE"). Applying the consolidation requirements for VIEs under the accounting rules in ASC Topic 810, Consolidation, the Company determined that it is the primary beneficiary based on its power to direct activities through its role as servicer and its obligations to absorb losses and right to receive benefits. The SBA 7(a) loan-backed notes are collateralized solely by the right to receive payments and other recoveries attributable to the unguaranteed portions of certain of our SBA 7(a) loans receivable. The SBA 7(a) loan-backed notes mature on March 20, 2043, with monthly payments due as payments on the collateralized loans are received. Based on the anticipated repayments of our collateralized SBA 7(a) loans, we estimate the weighted average life of the SBA 7(a) loan-backed notes to be approximately two years. The SBA 7(a) loan-backed notes bear interest at the lower of the one-month LIBOR plus 1.40% or the prime rate less 1.08%. We reflect the SBA 7(a) loans receivable as assets on our consolidated balance sheets and the SBA 7(a) loan-backed notes as debt on our consolidated balance sheets. The restricted cash on our consolidated balance sheets as of June 30, 2019 and December 31, 2018 included $1,756,000 and $3,174,000, respectively, of funds related to our SBA 7(a) loan-backed notes. In October 2018, CIM Commercial entered into a revolving credit facility with a bank syndicate pursuant to which CIM Commercial can borrow up to a maximum of $250,000,000, subject to a borrowing base calculation. The revolving credit facility is secured by deeds of trust on certain properties. Outstanding advances under the revolving credit facility bear interest at (i) the base rate plus 0.55% or (ii) LIBOR plus 1.55%. At December 31, 2018, the variable interest rate was 4.07%. The interest rate on the first $120,000,000 of one-month LIBOR indexed variable rate borrowings on our revolving credit facility was effectively converted to a fixed rate of 3.11% through interest rate swaps until such swaps were terminated on March 11, 2019. The revolving credit facility is also subject to an unused commitment fee of 0.15% or 0.25% depending on the amount of aggregate unused commitments. The revolving credit facility matures in October 2022 and provides for one one-year extension option under certain conditions. We expect the revolving credit facility to remain in place following the Program to Unlock Embedded Value in Our Portfolio and Improve Trading Liquidity of Our Common Stock, as defined in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q. On October 30, 2018, we borrowed $170,000,000 on this facility to repay outstanding borrowings on our unsecured term loan facility. On December 28, 2018, we repaid $40,000,000 of outstanding borrowings on our revolving credit facility and we terminated one interest rate swap with a notional value of $50,000,000 (Note 12). On February 28, 2019 and March 11, 2019, we repaid $10,000,000 and $120,000,000, respectively, of outstanding borrowings on our revolving credit facility using cash on hand and net proceeds from the 2019 asset sales (Note 3), and, in connection with the March 11, 2019 repayment, we terminated our two remaining interest rate swaps, which had an aggregate notional value of $120,000,000 (Note 12). At June 30, 2019 and December 31, 2018, $0 and $130,000,000, respectively, was outstanding under the revolving credit facility, and approximately $210,000,000 and $91,000,000, respectively, was available for future borrowings. The revolving credit facility is not subject to any financial covenants, but is subject to a borrowing base calculation that determines the amount we can borrow. On March 1, 2019, in connection with the sale of an office property in Washington, D.C., we prepaid the related mortgage loan with an outstanding principal balance of $46,000,000 at such time, using proceeds from the sale. As a result, we recognized a loss on early extinguishment of debt of $0 and $5,603,000 for the three and six months ended June 30, 2019, respectively, which represents a prepayment penalty of $5,325,000 and the write-off of deferred loan costs of $537,000 and related accumulated amortization of $259,000. At June 30, 2019 and December 31, 2018, accrued interest and unused commitment fees payable of $571,000 and $1,574,000, respectively, are included in accounts payable and accrued expenses. Future principal payments on our debt (face value) at June 30, 2019 are as follows:
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Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION PLANS | STOCK-BASED COMPENSATION PLANS In June 2017, we granted awards of 3,195 restricted shares of Common Stock to each of the independent members of the Board of Directors (9,585 in aggregate) under the 2015 Equity Incentive Plan, which fully vested in June 2018 based on one year of continuous service. In May 2018, we granted awards of 3,378 restricted shares of Common Stock to each of the independent members of the Board of Directors (10,134 in aggregate) under the 2015 Equity Incentive Plan, which fully vested in May 2019 based on one year of continuous service. In May 2019, we granted awards of 2,667 restricted shares of Common Stock to each of the independent members of the Board of Directors (10,668 in aggregate) under the 2015 Equity Incentive Plan, which vest after one year of continuous service. Compensation expense related to these restricted shares of Common Stock is recognized over the vesting period. We recorded compensation expense related to these restricted shares of Common Stock in the amount of $44,000 and $48,000 for the three months ended June 30, 2019 and 2018, respectively, and $82,000 and $86,000 for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, there was $167,000 of total unrecognized compensation expense related to restricted shares of Common Stock which will be recognized over the next year. In July 2019, we granted awards of 245 restricted shares of Common Stock to each of the independent members of the Board of Directors (980 in aggregate) under the 2015 Equity Incentive Plan, which will vest at the same time as the restricted shares of Common Stock granted in May 2019. |
EARNINGS PER SHARE (''EPS'') |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE ("EPS") | EARNINGS PER SHARE ("EPS") The computations of basic EPS are based on our weighted average shares outstanding. The basic weighted average number of shares of Common Stock outstanding was 43,791,000 and 43,791,000 for the three months ended June 30, 2019 and 2018, respectively, and 43,793,000 and 43,788,000 for the six months ended June 30, 2019 and 2018, respectively. In order to calculate the diluted weighted average number of shares of Common Stock outstanding for the three and six months ended June 30, 2019, the basic weighted average number of shares of Common Stock outstanding was increased by 2,062,000 and 2,011,000, respectively, to reflect the dilutive effect of our Series A Preferred Stock. The computation of diluted EPS does not include outstanding shares of Series A Preferred Stock for the three and six months ended June 30, 2018 because their impact was deemed to be anti-dilutive. Outstanding Series A Preferred Warrants were not included in the computation of diluted EPS for the three and six months ended June 30, 2019 and 2018 because their impact was either anti-dilutive or such warrants were not exercisable during such periods (Note 11). Outstanding shares of Series L Preferred Stock were not included in the computation of diluted EPS for the three and six months ended June 30, 2019 and 2018 because such shares were not redeemable during such periods. EPS for the year-to-date period may differ from the sum of quarterly EPS amounts due to the required method for computing EPS in the respective periods. In addition, EPS is calculated independently for each component and may not be additive due to rounding. The following table reconciles the numerator and denominator used in computing our basic and diluted per-share amounts for net income (loss) attributable to common stockholders for the three and six months ended June 30, 2019 and 2018:
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REDEEMABLE PREFERRED STOCK |
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Temporary Equity Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REDEEMABLE PREFERRED STOCK | REDEEMABLE PREFERRED STOCK Series A Preferred Stock—We have an effective registration statement with the SEC with respect to the offer and sale of up to $900,000,000 of units (collectively, the "Series A Preferred Units"), with each Series A Preferred Unit consisting of (i) one share of Series A Preferred Stock, par value $0.001 per share, of the Company (collectively, the "Series A Preferred Stock") with an initial stated value of $25.00 per share (the "Series A Preferred Stock Stated Value"), subject to adjustment, and (ii) one warrant (collectively, the "Series A Preferred Warrants") to purchase 0.25 of a share of Common Stock (Note 11). The registration statement allows us to sell up to a maximum of 36,000,000 Series A Preferred Units. Our Series A Preferred Stock ranks senior to our Common Stock with respect to payment of dividends and distributions of amounts upon liquidation, dissolution or winding up. Proceeds and expenses from the sale of the Series A Preferred Units are allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance. Our Series A Preferred Stock is redeemable at the option of the holder (the "Series A Preferred Stock Holder") or CIM Commercial. The redemption schedule of the Series A Preferred Stock allows redemptions at the option of the Series A Preferred Stock Holder from the date of original issuance of any given shares of Series A Preferred Stock through the second year at the Series A Preferred Stock Stated Value, plus accrued and unpaid dividends, subject to the payment of a 13.0% redemption fee. After year two, the redemption fee decreases to 10.0% and after year five there is no redemption fee. Also, CIM Commercial has the right to redeem the Series A Preferred Stock after year five at the Series A Preferred Stock Stated Value, plus accrued and unpaid dividends. At the Company's discretion, redemptions will be paid in cash or, on or after the first anniversary of the issuance of such shares of Series A Preferred Stock, an equal value of Common Stock based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption. As of June 30, 2019, we had issued 3,614,493 Series A Preferred Units and received gross proceeds of $90,362,000 ($90,006,000 of which were allocated to the Series A Preferred Stock and the remaining $356,000 were allocated to the Series A Preferred Warrants). In connection with such issuance, costs specifically identifiable to the offering of Series A Preferred Units, such as commissions, dealer manager fees and other offering fees and expenses, totaled $7,153,000 ($7,042,000 of which were allocated to the Series A Preferred Stock and the remaining $111,000 were allocated to the Series A Preferred Warrants). In addition, as of June 30, 2019, non-issuance-specific costs related to this offering totaled $5,087,000. As of June 30, 2019, we have reclassified and allocated $476,000 and $1,000 from deferred rent receivable and charges to Series A Preferred Stock and Series A Preferred Warrants, respectively, as a reduction to the gross proceeds received. Such reclassification was based on the cumulative number of Series A Preferred Units issued relative to the maximum number of Series A Preferred Units expected to be issued under the offering. As of June 30, 2019, 12,772 shares of Series A Preferred Stock had been redeemed. On the first anniversary of the date of original issuance of a particular share of Series A Preferred Stock, we reclassify such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. As of June 30, 2019, we have reclassified an aggregate of $49,019,000 in net proceeds from temporary equity to permanent equity. Holders of Series A Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends on each share of Series A Preferred Stock at an annual rate of 5.5% of the Series A Preferred Stock Stated Value (i.e., the equivalent of $0.34375 per share per quarter). Dividends on each share of Series A Preferred Stock begin accruing on, and are cumulative from, the date of issuance. Cash dividends declared on our Series A Preferred Stock for the six months ended June 30, 2019 and 2018 consist of the following:
On August 8, 2019, we declared a cash dividend of $0.34375 per share of our Series A Preferred Stock, or portion thereof for issuances during the period from July 1, 2019 to September 30, 2019, to be paid on October 15, 2019 to the holders of Series A Preferred Stock at the close of business on October 7, 2019. Series L Preferred Stock—On November 21, 2017, we issued 8,080,740 shares of Series L Preferred Stock having an initial stated value of $28.37 per share ("Series L Preferred Stock Stated Value"), subject to adjustment. We received gross proceeds of $229,251,000 from the sale of the Series L Preferred Stock, which was reduced by issuance-specific offering costs, such as commissions, dealer manager fees, and other offering fees and expenses, totaling $15,928,000, a discount of $2,946,000, and non-issuance-specific costs of $2,532,000. These fees have been recorded as a reduction to the gross proceeds in permanent equity. Our Series L Preferred Stock ranks senior to our Common Stock with respect to distributions of amounts upon liquidation, dissolution or winding up and junior to our Series A Preferred Stock and Common Stock with respect to the payment of dividends. From and after the fifth anniversary of the date of original issuance of the Series L Preferred Stock, each holder will have the right to require the Company to redeem, and the Company will also have the option to redeem (subject to certain conditions), such shares of Series L Preferred Stock at a redemption price equal to the Series L Preferred Stock Stated Value, plus, provided certain conditions are met, all accrued and unpaid distributions. Notwithstanding the foregoing, a holder of shares of our Series L Preferred Stock may require us to redeem such shares at any time prior to the fifth anniversary of the date of original issuance of the Series L Preferred Stock if (1) we do not declare and pay in full the distribution on the Series L Preferred Stock for any annual period prior to such fifth anniversary or (2) we do not declare and pay all accrued and unpaid distributions on the Series L Preferred Stock for all past dividend periods prior to the applicable holder redemption date. The applicable redemption price payable upon redemption of any Series L Preferred Stock will be made, in the Company's sole discretion, in the form of (A) cash in ILS at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) the NAV per share of our Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of our Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and our Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively. As of June 30, 2019, no shares of Series L Preferred Stock have been redeemed. Holders of Series L Preferred Stock are entitled to receive, if, as and when authorized by our Board of Directors, and declared by us out of legally available funds, cumulative cash dividends on each share of Series L Preferred Stock at an annual rate of 5.5% of the Series L Preferred Stock Stated Value (i.e., the equivalent of $1.56035 per share per year). Dividends on each share of Series L Preferred Stock began accruing on, and are cumulative from, the date of issuance. Cash dividends on shares of Series L Preferred Stock are paid annually, with the first distribution paid in January 2019 for the period from the date of issuance through December 31, 2018. If the Company fails to timely declare distributions or fails to timely pay distributions on the Series L Preferred Stock, the annual dividend rate of the Series L Preferred Stock will temporarily increase by 1.0% per year, up to a maximum rate of 8.5%. Accumulated cash dividends on our Series L Preferred Stock for the three and six months ended June 30, 2019 and 2018, are included in the numerator for purposes of calculating basic and diluted net income (loss) attributable to common stockholders per share (Note 9), and consist of the following:
Until the fifth anniversary of the date of original issuance of our Series L Preferred Stock, we are prohibited from issuing any shares of preferred stock ranking senior to or on parity with the Series L Preferred Stock with respect to the payment of dividends, other distributions, liquidation, and or dissolution or winding up of the Company unless the Minimum Fixed Charge Coverage Ratio, calculated in accordance with the Articles Supplementary describing the Series L Preferred Stock, is equal to or greater than 1.25:1.00. At June 30, 2019 and December 31, 2018, we were in compliance with the Series L Preferred Stock Minimum Fixed Charge Coverage Ratio. |
STOCKHOLDERS' EQUITY |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Dividends Cash dividends per share of Common Stock declared during the six months ended June 30, 2019 and 2018 consist of the following:
As previously announced, in connection with the Program to Unlock Embedded Value in Our Portfolio and Improve Trading Liquidity of Our Common Stock, as defined in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q, our board of directors reevaluated our dividend policy. As a result of such review, our board of directors established a new quarterly dividend rate of $0.025 per share of our Common Stock and, on August 8, 2019, we declared a cash dividend of $0.025 per share of our Common Stock (which will be equal to $0.075 per share of our Common Stock following the Reverse Stock Split), to be paid on September 18, 2019 to stockholders of record at the close of business on September 6, 2019. On August 8, 2019, in connection with the Program to Unlock Embedded Value in Our Portfolio and Improve Trading Liquidity of Our Common Stock, we declared a special cash dividend of $14.00 per share of Common Stock (the “Special Dividend”), or $613,294,000 in the aggregate, that will be paid on August 30, 2019 to stockholders of record at the close of business on August 19, 2019. The Special Dividend will be funded primarily by the net proceeds (after the repayment of debt) received from the sale of ten properties during 2019 (Note 3) and borrowings on our revolving credit facility. Also on August 8, 2019, we announced the Reverse Stock Split, which will become effective at 12:01 a.m. on September 3, 2019. Pursuant to the Reverse Stock Split, every three shares of Common Stock held by a stockholder immediately prior to the effective time of the Reverse Stock Split will be converted into one share of Common Stock. Fractional shares of Common Stock will not be issued as a result of the Reverse Stock Split; instead, holders of pre-split shares of Common Stock who otherwise would have been entitled to receive a fractional share of Common Stock will receive an amount in cash equal to the product of the fraction of a share multiplied by the September 3, 2019 closing price of the Common Stock on Nasdaq. On December 18, 2017, we declared a special cash dividend of $0.73 per share of Common Stock, or $1,575,000 in the aggregate, that was paid on January 11, 2018 to stockholders of record on December 29, 2017. This special cash dividend allowed common stockholders that did not participate in the December 18, 2017 private repurchase to receive the economic benefit of such repurchase. Pursuant to the December 18, 2017 private repurchase, the Company repurchased in a privately negotiated transaction, canceled and retired 14,090,909 shares of Common Stock from Urban Partners II, LLC ("Urban II"), a fund managed by an affiliate of CIM Group, the Administrator and the Operator of CIM Commercial (each as defined in Note 14), and an affiliate of CIM REIT and CIM Urban, for an aggregate purchase price of $310,000,000, or $22.00 per share. Urban II waived its right to receive the January 11, 2018 special cash dividend. Series A Preferred Warrants Each Series A Preferred Unit consists of (i) one share of Series A Preferred Stock (Note 10) and (ii) one Series A Preferred Warrant (Note 10) which allows the holder to purchase 0.25 of a share of Common Stock. The Series A Preferred Warrants are exercisable beginning on the first anniversary of the date of their original issuance until and including the fifth anniversary of the date of such issuance. The exercise price of each Series A Preferred Warrant is at a 15.0% premium to the per share estimated NAV of our Common Stock (as most recently published and designated as the Applicable NAV by us at the time of each issuance of Series A Preferred Warrants). At the effective time of the Reverse Stock Split, the exercise price of each outstanding Series A Preferred Warrant will automatically increase to three times the exercise price of such warrant immediately prior to the effective time of the Reverse Stock Split and the number of shares of Common Stock issuable upon the exercise of such warrant will automatically be adjusted to one-third of 0.25 (or approximately 0.0833) of a share of Common Stock. Further, the Company intends to reduce the strike price of each outstanding Series A Preferred Warrant to account for the effect of the Special Dividend. Proceeds and expenses from the sale of the Series A Preferred Units are allocated to the Series A Preferred Stock and Series A Preferred Warrants using their relative fair values on the date of issuance. As of June 30, 2019, we had issued 3,614,493 Series A Preferred Warrants in connection with our offering of Series A Preferred Units and allocated net proceeds of $244,000, after specifically identifiable offering costs and allocated general offering costs, to the Series A Preferred Warrants in permanent equity. |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES Hedges of Interest Rate Risk In order to manage financing costs and interest rate exposure related to the one-month LIBOR indexed variable rate borrowings, on August 13, 2015, we entered into ten interest rate swap agreements with multiple counterparties totaling $385,000,000 of notional value. These swap agreements became effective on November 2, 2015. During the year ended December 31, 2017, we repaid $215,000,000 of outstanding one-month LIBOR indexed variable rate borrowings and we terminated seven interest rate swaps with an aggregate notional value of $215,000,000, for which we received termination payments, net of fees, of $973,000. On December 28, 2018, we repaid $40,000,000 of outstanding one-month LIBOR indexed variable rate borrowings and we terminated one interest rate swap with a notional value of $50,000,000, for which we received a termination payment, net of fees, of $684,000. On March 11, 2019, we repaid $120,000,000 of outstanding one-month LIBOR indexed variable rate borrowings (Note 7) and we terminated our two remaining interest rate swaps with an aggregate notional value of $120,000,000, for which we received aggregate termination payments, net of fees, of $1,302,000. The fair value of our two remaining swaps at the time of termination was $1,421,000 resulting in a net loss of $0 and $119,000, which was recorded as a net increase to interest expense on our consolidated statements of operations for the three and six months ended June 30, 2019, respectively. Each of our interest rate swap agreements initially met the criteria for cash flow hedge accounting treatment and we had designated the interest rate swap agreements as cash flow hedges of the risk of variability attributable to changes in the one-month LIBOR. Accordingly, the interest rate swaps were recorded on our consolidated balance sheets at fair value, and prior to August 1, 2018, the changes in the fair value of the swaps were recorded in OCI and reclassified to earnings as an adjustment to interest expense as interest became receivable or payable (Note 2). On July 31, 2018, we determined the hedged forecasted transaction was no longer probable of occurring so all subsequent changes in the fair value of our interest rate swaps were included in interest expense on our consolidated statements of operations. The balance in AOCI as of July 31, 2018 was reclassified to earnings as an adjustment to interest expense on our consolidated statements of operations as the originally designated forecasted transaction affected earnings. For the three and six months ended June 30, 2019, $0 and $1,806,000, respectively, was reclassified from AOCI and decreased interest expense on our consolidated statements of operations, which included a write off of $1,580,000 at the time our two remaining interest rate swaps were terminated. For the three and six months ended June 30, 2018, there was no reclassification from AOCI to interest expense on our consolidated statements of operations. Beginning on August 1, 2018, changes in the fair value of the swaps were recorded in interest expense on our consolidated statements of operations. For the three and six months ended June 30, 2019, $0 and $209,000, respectively, was included as an increase in interest expense on our consolidated statements of operations related to the change in the fair value of our interest rate swaps. For the three and six months ended June 30, 2018, there was no interest expense on our consolidated statements of operations related to the change in the fair value of our interest rate swaps. Credit-Risk-Related Contingent Features Each of our interest rate swap agreements contained a provision under which we could also be declared in default under such agreements if we defaulted on the revolving credit facility or if we defaulted on the term loan facility. As of March 11, 2019, the date of termination of such swaps, and December 31, 2018, there have been no events of default under our interest rate swap agreements. Impact of Hedges on AOCI and Consolidated Statements of Operations The changes in the balance of each component of AOCI related to our interest rate swaps designated as cash flow hedges are as follows:
Reclassifications from AOCI As of July 31, 2018, the hedged forecasted transaction was no longer probable of occurring so the interest rate swaps were no longer eligible for hedge accounting and all future changes in fair value of the interest rate swaps were recorded in interest expense on our consolidated statements of operations and no further amounts were deferred into AOCI. The balance in AOCI as of July 31, 2018 was reclassified to earnings as an adjustment to interest expense on our consolidated statements of operations as the originally designated forecasted transaction affected earnings. On March 11, 2019, the remaining balance in AOCI was reclassified to earnings as a decrease to interest expense on our consolidated statements of operations in connection with the termination of our two remaining interest rate swaps. |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
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FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS We determine the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. The hierarchy for inputs used in measuring fair value is as follows: Level 1 Inputs—Quoted prices in active markets for identical assets or liabilities Level 2 Inputs—Observable inputs other than quoted prices in active markets for identical assets and liabilities Level 3 Inputs—Unobservable inputs In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, 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. Our derivative financial instruments (Note 12) were measured at fair value on a recurring basis and were presented on our consolidated balance sheets at fair value, on a gross basis, excluding accrued interest. The table below presents the fair value of our derivative financial instruments as well as their classification on our consolidated balance sheets:
Interest Rate Swaps—We estimated the fair value of our interest rate swaps by calculating the credit-adjusted present value of the expected future cash flows of each swap. The calculation incorporated the contractual terms of the derivatives, observable market interest rates which we considered to be Level 2 inputs, and credit risk adjustments, if any, to reflect the counterparty's as well as our own nonperformance risk. The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on our consolidated balance sheets are as follows:
Management's estimation of the fair value of our financial instruments other than our interest rate swaps is based on a Level 3 valuation in the fair value hierarchy established for disclosure of how a company values its financial instruments. In general, quoted market prices from active markets for the identical financial instrument (Level 1 inputs), if available, should be used to value a financial instrument. If quoted prices are not available for the identical financial instrument, then a determination should be made if Level 2 inputs are available. Level 2 inputs include quoted prices for similar financial instruments in active markets for identical or similar financial instruments in markets that are not active (i.e., markets in which there are few transactions for the financial instruments, the prices are not current, price quotations vary substantially, or in which little information is released publicly). There is limited reliable market information for our financial instruments and we utilize other methodologies based on unobservable inputs for valuation purposes since there are no Level 1 or Level 2 inputs available. Accordingly, Level 3 inputs are used to measure fair value. In general, estimates of fair value may differ from the carrying amounts of the financial assets and liabilities primarily as a result of the effects of discounting future cash flows. Considerable judgment is required to interpret market data and develop estimates of fair value. Accordingly, the estimates presented are made at a point in time and may not be indicative of the amounts we could realize in a current market exchange. The carrying amounts of our secured borrowings—government guaranteed loans, SBA 7(a) loan-backed notes and revolving credit facility approximate their fair values, as the interest rates on these securities are variable and approximate current market interest rates. SBA 7(a) Loans Receivable, Subject to Loan-Backed Notes—These loans receivable represent the unguaranteed portions of loans originated under the SBA 7(a) Program which were transferred to a trust and are held as collateral in connection with a securitization transaction. The proceeds from the transfer have been recorded as SBA 7(a) loan-backed notes payable. In order to determine the estimated fair value of these loans receivable, we use a present value technique for the anticipated future cash flows using certain assumptions. At June 30, 2019, our assumptions included discount rates ranging from 7.75% to 9.50% and prepayment rates ranging from 12.10% to 17.50%. At December 31, 2018, our assumptions included discount rates ranging from 6.75% to 9.25% and prepayment rates ranging from 9.59% to 17.50%. SBA 7(a) Loans Receivable, Subject to Credit Risk—Loans receivable were initially recorded at estimated fair value at the Acquisition Date. Loans receivable originated subsequent to the Acquisition Date are recorded at cost upon origination and adjusted by net loan origination fees and discounts. In order to determine the estimated fair value of our loans receivable, we use a present value technique for the anticipated future cash flows using certain assumptions. At June 30, 2019, our assumptions included discount rates ranging from 7.25% to 10.00% and prepayment rates ranging from 8.03% to 17.50%. At December 31, 2018, our assumptions included discount rates ranging from 6.75% to 9.75% and prepayment rates ranging from 4.91% to 17.50%. SBA 7(a) Loans Receivable, Subject to Secured Borrowings—These loans receivable represent the government guaranteed portion of loans which were sold with the proceeds received from the sale reflected as secured borrowings—government guaranteed loans. There is no credit risk associated with these loans since the SBA has guaranteed payment of the principal. In order to determine the estimated fair value of these loans receivable, we use a present value technique for the anticipated future cash flows taking into consideration the lack of credit risk. At June 30, 2019, our assumptions included discount rates ranging from 9.00% to 9.75% and prepayment rates ranging from and 10.29% to 17.50%. At December 31, 2018, our assumptions included discount rates ranging from 8.75% to 9.50% and prepayment rates ranging from and 10.29% to 17.50%. Mortgages Payable—The fair values of mortgages payable are estimated based on current interest rates available for debt instruments with similar terms. The fair value of our mortgages payable is sensitive to fluctuations in interest rates. Discounted cash flow analysis is generally used to estimate the fair value of our mortgages payable, using a rate of 3.81% at June 30, 2019, and rates ranging from 4.62% to 4.64% at December 31, 2018. Junior Subordinated Notes—The fair value of the junior subordinated notes is estimated based on current interest rates available for debt instruments with similar terms. Discounted cash flow analysis is generally used to estimate the fair value of our junior subordinated notes. The rate used was 6.57% and 7.05% at June 30, 2019 and December 31, 2018, respectively. |
RELATED-PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS Asset Management and Other Fees to Related Parties In December 2015, CIM Urban and CIM Investment Advisors, LLC, an affiliate of CIM REIT and CIM Group, entered into an investment management agreement, pursuant to which CIM Urban engaged CIM Investment Advisors, LLC to provide certain services to CIM Urban (the “Investment Management Agreement”). CIM Investment Advisors, LLC changed its name to CIM Capital, LLC in December 2018, and, on January 1, 2019, assigned its duties under the Investment Management Agreement to its four wholly-owned subsidiaries: CIM Capital Securities Management, LLC, a securities manager, CIM Capital RE Debt Management, LLC, a debt manager, CIM Capital Controlled Company Management, LLC, a controlled company manager, and CIM Capital Real Property Management, LLC, a real property manager. The "Operator" refers to CIM Investment Advisors, LLC from December 10, 2015 to December 31, 2018 and to CIM Capital, LLC and its four wholly-owned subsidiaries on and after January 1, 2019. CIM Urban pays asset management fees to the Operator on a quarterly basis in arrears. The fee is calculated as a percentage of the daily average adjusted fair value of CIM Urban's assets:
The Operator earned asset management fees of $2,919,000 and $4,460,000 for the three months ended June 30, 2019 and 2018, respectively, and $7,245,000 and $8,875,000 for the six months ended June 30, 2019 and 2018, respectively. At June 30, 2019 and December 31, 2018, asset management fees of $2,929,000 and $4,540,000, respectively, were due to the Operator. CIM Management, Inc. and certain of its affiliates (collectively, the "CIM Management Entities"), all affiliates of CIM REIT and CIM Group, provide property management, leasing, and development services to CIM Urban. The CIM Management Entities earned property management fees, which are included in rental and other property operating expenses, totaling $607,000 and $1,083,000 for the three months ended June 30, 2019 and 2018, respectively, and $1,612,000 and $2,205,000 for the six months ended June 30, 2019 and 2018, respectively. CIM Urban also reimbursed the CIM Management Entities $1,406,000 and $1,533,000 for the three months ended June 30, 2019 and 2018, respectively, and $3,036,000 and $3,267,000 for the six months ended June 30, 2019 and 2018, respectively, for onsite management costs incurred on behalf of CIM Urban, which are included in rental and other property operating expenses. The CIM Management Entities earned leasing commissions of $556,000 and $30,000 for the three months ended June 30, 2019 and 2018, respectively, and $578,000 and $219,000 for the six months ended June 30, 2019 and 2018, respectively, which were capitalized to deferred charges. In addition, the CIM Management Entities earned construction management fees of $69,000 and $86,000 for the three months ended June 30, 2019 and 2018, respectively, and $169,000 and $441,000 for the six months ended June 30, 2019 and 2018, respectively, which were capitalized to investments in real estate. At June 30, 2019 and December 31, 2018, fees payable and expense reimbursements due to the CIM Management Entities of $2,577,000 and $3,202,000, respectively, are included in due to related parties. Also included in due to related parties as of June 30, 2019 and December 31, 2018, were $20,000 and $315,000, respectively, due to the CIM Management Entities and certain of its affiliates. On March 11, 2014, CIM Commercial and its subsidiaries entered into a master services agreement (the "Master Services Agreement") with CIM Service Provider, LLC (the "Administrator"), an affiliate of CIM Group, pursuant to which the Administrator has agreed to provide, or arrange for other service providers to provide, management and administration services to CIM Commercial and its subsidiaries. Pursuant to the Master Services Agreement, we appointed an affiliate of CIM Group as the administrator of Urban Partners GP, LLC. Under the Master Services Agreement, CIM Commercial pays a base service fee (the "Base Service Fee") to the Administrator initially set at $1,000,000 per year (subject to an annual escalation by a specified inflation factor beginning on January 1, 2015), payable quarterly in arrears. The Administrator earned a Base Service Fee of $276,000 and $269,000 for the three months ended June 30, 2019 and 2018, respectively, and $552,000 and $539,000 for the six months ended June 30, 2019 and 2018, respectively. In addition, pursuant to the terms of the Master Services Agreement, the Administrator may receive compensation and or reimbursement for performing certain services for CIM Commercial and its subsidiaries that are not covered under the Base Service Fee. During the six months ended June 30, 2019 and 2018, such services performed by the Administrator and its affiliates included accounting, tax, reporting, internal audit, legal, compliance, risk management, IT, human resources, corporate communications, and from and after September 2018, operational and on-going support in connection with our offering of Series A Preferred Units. The Administrator's compensation is based on the salaries and benefits of the employees of the Administrator and or its affiliates who performed these services (allocated based on the percentage of time spent on the affairs of CIM Commercial and its subsidiaries). We expensed $488,000 and $697,000 for the three months ended June 30, 2019 and 2018, respectively, and $1,058,000 and $1,555,000 for the six months ended June 30, 2019 and 2018, respectively, for such services which are included in asset management and other fees to related parties. At June 30, 2019 and December 31, 2018, $1,022,000 and $1,490,000 was due to the Administrator, respectively, for such services. On January 1, 2015, we entered into a Staffing and Reimbursement Agreement with CIM SBA Staffing, LLC ("CIM SBA"), an affiliate of CIM Group, and our subsidiary, PMC Commercial Lending, LLC. The agreement provides that CIM SBA will provide personnel and resources to us and that we will reimburse CIM SBA for the costs and expenses of providing such personnel and resources. For the three months ended June 30, 2019 and 2018, we incurred expenses related to services subject to reimbursement by us under this agreement of $551,000 and $639,000, respectively, which are included in asset management and other fees to related parties for lending segment costs, and $54,000 and $78,000, respectively, for corporate services, which are included in asset management and other fees to related parties. For the six months ended June 30, 2019 and 2018, we incurred expenses related to such services of $1,188,000 and $1,240,000, respectively, which are included in asset management and other fees to related parties for lending segment costs, and $131,000 and $145,000, respectively, for corporate services, which are included in asset management and other fees to related parties. In addition, we deferred personnel costs of $44,000 and $88,000 for the three months ended June 30, 2019 and 2018, respectively, and $50,000 and $136,000 for the six months ended June 30, 2019 and 2018, respectively, associated with services provided for originating loans. At June 30, 2019 and December 31, 2018, $612,000 and $1,347,000, respectively, was due to CIM SBA for costs and expenses of providing such personnel and resources. On May 10, 2018, the Company executed a wholesaling agreement (the "Wholesaling Agreement") with International Assets Advisors, LLC ("IAA") and CCO Capital, LLC ("CCO Capital"). IAA was the exclusive dealer manager for the Company’s public offering of Series A Preferred Units until May 31, 2019. CCO Capital is a registered broker dealer and is under common control with the Operator and the Administrator. Under the Wholesaling Agreement, among other things, CCO Capital, in its capacity as the wholesaler for the offering, assisted IAA with the sale of Series A Preferred Units. In exchange for such services, IAA paid CCO Capital a fee equal to 2.75% of the selling price of each Series A Preferred Unit for which a sale was completed, reduced by any applicable fee reallowances payable to soliciting dealers pursuant to separate soliciting dealer agreements between IAA and soliciting dealers. The foregoing fee was reduced, and could have been exceeded, by a fixed monthly payment by CCO Capital to IAA for IAA’s services in connection with periodic closings and settlements for the offering. On May 31, 2019, the Company, IAA and CCO Capital entered into an Amendment, Assignment and Assumption Agreement (the “Assignment Agreement”), pursuant to which CCO Capital assumed all of the rights and obligations of IAA under the dealer manager agreement, dated as of June 28, 2016, as amended, by and between the Company and IAA. As a result of the Assignment Agreement, CCO Capital became the exclusive dealer manager for the Company’s public offering of the Series A Preferred Units effective as of May 31, 2019. In connection with the execution of the Assignment Agreement, the Company terminated the Wholesaling Agreement effective as of May 31, 2019. At June 30, 2019 and December 31, 2018, $386,000 and $200,000, respectively, was included in deferred costs for CCO Capital fees, of which $133,000 and $138,000, respectively, was included in due to related parties. CCO Capital incurred issuance-specific costs of $102,000, which were allocated to the Series A Preferred Stock for each of the three and six months ended June 30, 2019. Other On October 1, 2015, an affiliate of CIM Group entered into a 5-year lease renewal with respect to a property owned by the Company, which lease was amended to a month-to-month term in February 2019. We recorded rental and other property income related to this tenant of $28,000 and $27,000 for the three months ended June 30, 2019 and 2018, respectively, and $55,000 and $54,000 for the six months ended June 30, 2019 and 2018, respectively. On May 15, 2019, CIM Group entered into an approximately eleven-year lease for approximately 32,000 rentable square feet with respect to a property owned by the Company. For each of the three and six months ended June 30, 2019, we recorded rental and other property income related to this tenant of $206,000. The lease was amended on August 7, 2019 to reduce the rentable square feet to approximately 30,000 rentable square feet. |
COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Loan Commitments—Commitments to extend credit are agreements to lend to a customer provided the terms established in the contract are met. Our outstanding loan commitments to fund loans were $7,607,000 at June 30, 2019 and are for prime-based loans to be originated by our subsidiary engaged in SBA 7(a) Program lending, the government guaranteed portion of which is intended to be sold. Commitments generally have fixed expiration dates. Since some commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. General—In connection with the ownership and operation of real estate properties, we have certain obligations for the payment of tenant improvement allowances and lease commissions in connection with new leases and renewals. CIM Commercial had a total of $9,716,000 in future obligations under leases to fund tenant improvements and other future construction obligations at June 30, 2019, which excludes $396,000 related to assets held for sale, net, at June 30, 2019. At June 30, 2019, $2,813,000 was funded to reserve accounts included in restricted cash on our consolidated balance sheet for these tenant improvement obligations in connection with the mortgage loan agreements entered into in June 2016. Employment Agreements—We have employment agreements with two of our officers. Under certain circumstances, each of these employment agreements provides for (1) severance payment equal to the annual base salary paid to the officer and (2) death and disability payments in an amount equal to two times and one time, respectively, the annual base salary paid to the officers. Litigation—We are not currently involved in any material pending or threatened legal proceedings nor, to our knowledge, are any material legal proceedings currently threatened against us, other than routine litigation arising in the ordinary course of business. In the normal course of business, we are periodically party to certain legal actions and proceedings involving matters that are generally incidental to our business. While the outcome of these legal actions and proceedings cannot be predicted with certainty, in management's opinion, the resolution of these legal proceedings and actions will not have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. In September 2018, we filed a lawsuit against the City and County of San Francisco seeking a refund of the $11,845,000 in penalties, interest and legal fees paid by us for real property transfer tax allegedly due for a transaction in a prior year. We disputed that such penalties, interest and legal fees were payable but, in order to contest the asserted tax obligations, we had to pay such amounts to the City and County of San Francisco in August 2017. We intend to vigorously pursue this litigation. A subsidiary of the Company is a defendant in a lawsuit in connection with injuries sustained by a third-party contractor at a property previously owned by such subsidiary. While it is possible that a loss may be incurred, we are unable to estimate a range of potential losses due to the complexity and current status of the lawsuit. However, we maintain insurance coverage to mitigate the impact of adverse exposures in lawsuits of this nature and do not expect this lawsuit to have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. SBA Related—If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced under the SBA 7(a) Program, the SBA may seek recovery of the principal loss related to the deficiency from us. With respect to the guaranteed portion of SBA loans that have been sold, the SBA will first honor its guarantee and then seek compensation from us in the event that a loss is deemed to be attributable to technical deficiencies. Based on historical experience, we do not expect that this contingency is probable to be asserted. However, if asserted, it could have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. Environmental Matters—In connection with the ownership and operation of real estate properties, we may be potentially liable for costs and damages related to environmental matters, including asbestos-containing materials. We have not been notified by any governmental authority of any noncompliance, liability, or other claim in connection with any of the properties, and we are not aware of any other environmental condition with respect to any of the properties that management believes will have a material adverse effect on our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of distributions on our Common Stock or Preferred Stock. Rent Expense—We lease office space in Dallas, Texas under a lease which, as amended, expires in May 2020. In determining whether this contract constitutes a lease, we determined that the office space is explicitly identified in the contract. Additionally, so long as payments are made timely under this lease, we as the tenant have the right to obtain substantially all the economic benefits from the use of this identified asset and can direct how and for what purpose the office space is used to conduct our operations. As of June 30, 2019, the right-of-use asset and lease liability balance was approximately $234,000. The right-of-use asset is included within other assets and the lease liability is included within other liabilities on our consolidated balance sheet. We recorded rent expense of $79,000 and $62,000 for the three months ended June 30, 2019 and 2018, respectively, and $155,000 and $117,000 for the six months ended June 30, 2019 and 2018, respectively, in general and administrative expenses on our consolidated statements of operations. At June 30, 2019, our scheduled future noncancelable minimum lease payments were $128,000 for the six months ending December 31, 2019 and $106,000 for the year ending December 31, 2020. |
FUTURE MINIMUM LEASE RENTALS |
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FUTURE MINIMUM LEASE RENTALS | FUTURE MINIMUM LEASE RENTALS Future minimum rental revenue under long-term operating leases at June 30, 2019, excluding tenant reimbursements of certain costs, are as follows:
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CONCENTRATIONS |
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CONCENTRATIONS | CONCENTRATIONS Tenant Revenue Concentrations—Rental and other property income from the U.S. General Services Administration and other government agencies (collectively, "Governmental Tenants"), which primarily occupied space in our properties located in Washington, D.C., accounted for approximately 21.9% and 24.7% of our office segment revenues for the three months ended June 30, 2019 and 2018, respectively, and 22.7% and 25.4% for the six months ended June 30, 2019 and 2018, respectively. At June 30, 2019 and December 31, 2018, $1,528,000 and $2,899,000, respectively, was due from Governmental Tenants. Rental and other property income from Kaiser Foundation Health Plan, Incorporated ("Kaiser"), which occupied space in two of our Oakland, California properties, accounted for approximately 16.9% and 12.2% of our office segment revenues for the three months ended June 30, 2019 and 2018, respectively, and 13.5% and 12.9% for the six months ended June 30, 2019 and 2018, respectively. At June 30, 2019 and December 31, 2018, $131,000 and $331,000, respectively, was due from Kaiser. Geographical Concentrations of Investments in Real Estate—As of June 30, 2019 and December 31, 2018, we owned 10 and 16 office properties, respectively, one hotel property, one and two parking garages, respectively, and two development sites, one of which is being used as a parking lot. These properties are located in two states and Washington, D.C. Our revenue concentrations from properties are as follows:
Our real estate investments concentrations from properties are as follows:
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SEGMENT DISCLOSURE |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT DISCLOSURE | SEGMENT DISCLOSURE In accordance with ASC Topic 280, Segment Reporting, our reportable segments during the three and six months ended June 30, 2019 and 2018 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for our lending business. Management internally evaluates the operating performance and financial results of the segments based on net operating income. We also have certain general and administrative level activities, including public company expenses, legal, accounting, and tax preparation that are not considered separate operating segments. The reportable segments are accounted for on the same basis of accounting as described in the notes to our audited consolidated financial statements for the year ended December 31, 2018 included in our Annual Report on Form 10-K filed with the SEC on March 18, 2019. For our real estate segments, we define net operating income as rental and other property income and expense reimbursements less property related expenses, and excludes non-property income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, gain (loss) on sale of real estate, gain (loss) on early extinguishment of debt, impairment of real estate, transaction costs, and provision for income taxes. For our lending segment, we define net operating income as interest income net of interest expense and general overhead expenses. The net operating income of our segments for the three and six months ended June 30, 2019 and 2018 is as follows:
A reconciliation of our segment net operating income to net income attributable to the Company for the three and six months ended June 30, 2019 and 2018 is as follows:
The condensed assets for each of the segments as of June 30, 2019 and December 31, 2018, along with capital expenditures and loan originations for the six months ended June 30, 2019 and 2018, are as follows:
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||
Interim Financial Information | Interim Financial Information—The accompanying interim consolidated financial statements of CIM Commercial have been prepared by our management in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial information reflects all adjustments which are, in the opinion of our management, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. Our accompanying interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the notes thereto, included in our Annual Report on Form 10-K filed with the SEC on March 18, 2019. |
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Principles of Consolidation | Principles of Consolidation—The consolidated financial statements include the accounts of CIM Commercial and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
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Investments in Real Estate | Investments in Real Estate—Real estate acquisitions are recorded at cost as of the acquisition date. Costs related to the acquisition of properties were expensed as incurred for acquisitions that occurred prior to October 1, 2017. For any acquisition occurring on or after October 1, 2017, we have conducted and will conduct an analysis to determine if the acquisition constitutes a business combination or an asset purchase. If the acquisition constitutes a business combination, then the transaction costs will be expensed as incurred, and if the acquisition constitutes an asset purchase, then the transaction costs will be capitalized. Investments in real estate are stated at depreciated cost. Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:
We capitalize project costs, including pre-construction costs, interest expense, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, or construction of a project, while activities are ongoing to prepare an asset for its intended use. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. Ordinary repairs and maintenance are expensed as incurred. Investments in real estate are evaluated for impairment on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount to the future net cash flows, undiscounted and without interest, expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The estimated fair value of the asset group identified for step two of the impairment testing under GAAP is based on either the income approach, with market discount rate, terminal capitalization rate and rental rate assumptions being most critical to such analysis, or on the sales comparison approach to similar properties. Assets held for sale are reported at the lower of the asset's carrying amount or fair value, less costs to sell. |
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Derivative Financial Instruments | Derivative Financial Instruments—As part of risk management and operational strategies, from time to time, we may enter into derivative contracts with various counterparties. All derivatives are recognized on the balance sheet at their estimated fair value. On the date that we enter into a derivative contract, we designate the derivative as a fair value hedge, a cash flow hedge, a foreign currency fair value or cash flow hedge, a hedge of a net investment in a foreign operation, or a trading or non-hedging instrument. Changes in the estimated fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge, to the extent that the hedge is effective, are initially recorded in other comprehensive income ("OCI"), and are subsequently reclassified into earnings as a component of interest expense when the variability of cash flows of the hedged transaction affects earnings (e.g., when periodic settlements of a variable-rate asset or liability are recorded in earnings). Any hedge ineffectiveness (which represents the amount by which the changes in the estimated fair value of the derivative differ from the variability in the cash flows of the forecasted transaction) is recognized in current-period earnings as a component of interest expense. When an interest rate swap designated as a cash flow hedge no longer qualifies for hedge accounting, we recognize changes in the estimated fair value of the hedge previously deferred to accumulated other comprehensive income ("AOCI"), along with any changes in estimated fair value occurring thereafter, through earnings. We classify cash flows from interest rate swap agreements as net cash provided by operating activities on the consolidated statements of cash flows as our accounting policy is to present the cash flows from the hedging instruments in the same category in the consolidated statements of cash flows as the category for the cash flows from the hedged items. See Note 12 for disclosures about our derivative financial instruments and hedging activities. |
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Revenue Recognition | Revenue from lending activities Interest income included in interest and other income is comprised of interest earned on loans and our short-term investments and the accretion of net loan origination fees and discounts. Interest income on loans is accrued as earned with the accrual of interest suspended when the related loan becomes a Non-Accrual Loan (as defined below). Revenue from hotel activities Hotel revenue is recognized upon establishment of a contract with a customer. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or implied by customary business practices. Various performance obligations of hotel revenues can be categorized as follows:
Cancellable reservations represent a single performance obligation of providing lodging services at the hotel. The Company satisfies its performance obligation and recognizes revenues associated with these reservations over time as services are rendered to the customer. The Company satisfies its performance obligation and recognizes revenues associated with noncancelable reservations at the earlier of (i) the date on which the customer cancels the reservation or (ii) over time as services are rendered to the customer. Ancillary services include facilities usage and providing food and beverage. The Company satisfies its performance obligation and recognizes revenues associated with these services at a point in time as the good or service is delivered to the customer. At inception of these contracts with customers for hotel revenues, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate. Revenue Recognition—We use a five-step model to recognize revenue for contracts with customers. The five-step model requires that we (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation. Revenue from leasing activities We operate as a lessor of real estate assets, primarily in Class A and creative office assets. In determining whether our contracts with our tenants constitute leases, we determined that our contracts explicitly identify the premises and that any substitution rights to relocate the tenant to other premises within the same building stated in the contract are not substantive. Additionally, so long as payments are made timely under these contracts, our tenants have the right to obtain substantially all the economic benefits from the use of this identified asset and can direct how and for what purpose the premises are used to conduct their operations. Therefore, our contracts with our tenants constitute leases. All leases are classified as operating leases and minimum rents are recognized on a straight-line basis over the terms of the leases when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased asset. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is recorded as deferred rent. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is considered the owner of the improvements, any tenant improvement allowance that is funded is treated as an incentive. Lease incentives paid to tenants are included in other assets and amortized as a reduction to rental revenue on a straight-line basis over the term of the related lease. Reimbursements from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes, insurance, and other recoverable costs, are recognized as revenue in the period the expenses are incurred. Tenant reimbursements are recognized and presented on a gross basis when we are primarily responsible for fulfilling the promise to provide the specified good or service and control that specified good or service before it is transferred to the tenant. We have elected not to separate lease and non-lease components as the pattern of revenue recognition does not differ for the two components, and the non-lease component is not the primary component in our leases. In addition to minimum rents, certain leases provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Percentage rent is recognized once lessees’ specified sales targets have been met. We derive parking revenues from leases with third-party operators. Our parking leases provide for additional rents based upon varying percentages of tenants’ sales in excess of annual minimums. Parking percentage rent is recognized once lessees’ specific sales targets have been met. Tenant recoveries outside of the lease agreements Tenant recoveries outside of the lease agreements are related to construction projects in which our tenants have agreed to fully reimburse us for all costs related to construction. These services include architectural, permit expediter and construction services. At inception of the contract with the customer, the contractual price is equivalent to the transaction price as there are no elements of variable consideration to estimate. While these individual services are distinct, in the context of the arrangement with the customer, all of these services are bundled together and represent a single package of construction services requested by the customer. The Company satisfies its performance obligation and recognizes revenues associated with these services over time as the construction is completed. |
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Loans Receivable | Loans Receivable—Our loans receivable are carried at their unamortized principal balance less unamortized acquisition discounts and premiums, retained loan discounts and loan loss reserves. For loans originated under the Small Business Administration's ("SBA") 7(a) Guaranteed Loan Program ("SBA 7(a) Program"), we sell the portion of the loan that is guaranteed by the SBA. Upon sale of the SBA guaranteed portion of the loans, which are accounted for as sales, the unguaranteed portion of the loan retained by us is valued on a fair value basis and a discount is recorded as a reduction in basis of the retained portion of the loan. Unamortized retained loan discounts were $7,557,000 and $7,234,000 as of June 30, 2019 and December 31, 2018, respectively. At the Acquisition Date, the carrying value of our loans was adjusted to estimated fair market value and acquisition discounts of $33,907,000 were recorded, which are being accreted to interest and other income using the effective interest method. We sold substantially all of our commercial mortgage loans with unamortized acquisition discounts of $15,951,000 to an unrelated third-party in December 2015. Acquisition discounts of $808,000 and $884,000 remained as of June 30, 2019 and December 31, 2018, respectively. A loan receivable is generally classified as non-accrual (a "Non-Accrual Loan") if (i) it is past due as to payment of principal or interest for a period of 60 days or more, (ii) any portion of the loan is classified as doubtful or is charged-off or (iii) the repayment in full of the principal and or interest is in doubt. Generally, loans are charged-off when management determines that we will be unable to collect any remaining amounts due under the loan agreement, either through liquidation of collateral or other means. Interest income, included in interest and other income, on a Non-Accrual Loan is recognized on either the cash basis or the cost recovery basis. On a quarterly basis, and more frequently if indicators exist, we evaluate the collectability of our loans receivable. Our evaluation of collectability involves judgment, estimates, and a review of the ability of the borrower to make principal and interest payments, the underlying collateral and the borrowers' business models and future operations in accordance with Accounting Standards Codification ("ASC") 450-20, Contingencies—Loss Contingencies, and ASC 310-10, Receivables. For the three and six months ended June 30, 2019, we recorded $1,000 and $58,000, respectively, of impairment on our loans receivable. For the three and six months ended June 30, 2018, we recorded no impairment on our loans receivable. We establish a general loan loss reserve when available information indicates that it is probable a loss has occurred based on the carrying value of the portfolio and the amount of the loss can be reasonably estimated. Significant judgment is required in determining the general loan loss reserve, including estimates of the likelihood of default and the estimated fair value of the collateral. The general loan loss reserve includes those loans, which may have negative characteristics which have not yet become known to us. In addition to the reserves established on loans not considered impaired that have been evaluated under a specific evaluation, we establish the general loan loss reserve using a consistent methodology to determine a loss percentage to be applied to loan balances. These loss percentages are based on many factors, primarily cumulative and recent loss history and general economic conditions. |
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Deferred Rent Receivable and Charges | Deferred Rent Receivable and Charges—Deferred rent receivable and charges consist of deferred rent, deferred leasing costs, deferred offering costs (Note 10) and other deferred costs. Deferred rent receivable is $18,531,000 and $52,366,000 at June 30, 2019 and December 31, 2018, respectively. Deferred leasing costs, which represent lease commissions and other direct costs associated with the acquisition of tenants, are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred leasing costs of $16,588,000 and $51,152,000 are presented net of accumulated amortization of $6,775,000 and $23,910,000 at June 30, 2019 and December 31, 2018, respectively. Deferred offering costs represent direct costs incurred in connection with our offering of Series A Preferred Units (as defined in Note 10), excluding costs specifically identifiable to a closing, such as commissions, dealer-manager fees, and other offering fees and expenses. For a specific issuance of Series A Preferred Units, issuance-specific offering costs are recorded as a reduction of proceeds raised on the issuance date. Offering costs incurred but not directly related to a specifically identifiable closing are deferred. Deferred offering costs are first allocated to each issuance on a pro-rata basis equal to the ratio of Series A Preferred Units issued in an issuance to the maximum number of Series A Preferred Units that are expected to be issued. Then, the issuance-specific offering costs and the deferred offering costs allocated to such issuance are further allocated to the Series A Preferred Stock (as defined in Note 10) and Series A Preferred Warrants (as defined in Note 10) issued in such issuance based on the relative fair value of the instruments on the date of issuance. The deferred offering costs allocated to the Series A Preferred Stock and Series A Preferred Warrants are reductions to temporary equity and permanent equity, respectively. |
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Redeemable Preferred Stock | Redeemable Preferred Stock—Beginning on the date of original issuance of any given shares of Series A Preferred Stock (Note 10), the holder of such shares has the right to require the Company to redeem such shares at a redemption price of 100% of the Series A Preferred Stock Stated Value (as defined in Note 10), plus accrued and unpaid dividends, subject to the payment of a redemption fee until the fifth anniversary of such issuance. From and after the fifth anniversary of the date of the original issuance, the holder will have the right to require the Company to redeem such shares at a redemption price of 100% of the Series A Preferred Stock Stated Value, plus accrued and unpaid dividends, without a redemption fee, and the Company will have the right (but not the obligation) to redeem such shares at 100% of the Series A Preferred Stock Stated Value, plus accrued and unpaid dividends. The applicable redemption price payable upon redemption of any Series A Preferred Stock is payable in cash or, on or after the first anniversary of the issuance of such shares of Series A Preferred Stock to be redeemed, in the Company's sole discretion, in cash or in equal value through the issuance of shares of Common Stock, based on the volume weighted average price of our Common Stock for the 20 trading days prior to the redemption. Since a holder of Series A Preferred Stock has the right to request redemption of such shares and redemptions prior to the first anniversary are to be paid in cash, we have recorded the activity related to our Series A Preferred Stock in temporary equity. We recorded the activity related to our Series A Preferred Warrants (Note 10) in permanent equity. On the first anniversary of the date of original issuance of a particular share of Series A Preferred Stock, we reclassify such share of Series A Preferred Stock from temporary equity to permanent equity because the feature giving rise to temporary equity classification, the requirement to satisfy redemption requests in cash, lapses on the first anniversary date. Proceeds and expenses from the sale of the Series A Preferred Units are allocated to the Series A Preferred Stock and the Series A Preferred Warrants using their relative fair values on the date of issuance. From and after the fifth anniversary of the date of original issuance of the Series L Preferred Stock, each holder will have the right to require the Company to redeem, and the Company will also have the option to redeem (subject to certain conditions), such shares of Series L Preferred Stock at a redemption price equal to the Series L Preferred Stock Stated Value (as defined in Note 10), plus, provided certain conditions are met, all accrued and unpaid distributions. Notwithstanding the foregoing, a holder of shares of our Series L Preferred Stock may require us to redeem such shares at any time prior to the fifth anniversary of the date of original issuance of the Series L Preferred Stock if (1) we do not declare and pay in full the distributions on the Series L Preferred Stock for any annual period prior to such fifth anniversary or (2) we do not declare and pay all accrued and unpaid distributions on the Series L Preferred Stock for all past dividend periods prior to the applicable holder redemption date. The applicable redemption price payable upon redemption of any Series L Preferred Stock will be made, in the Company's sole discretion, in the form of (A) cash in Israeli new shekels ("ILS") at the then-current currency exchange rate determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, (B) in equal value through the issuance of shares of Common Stock, with the value of such Common Stock to be deemed the lower of (i) our net asset value ("NAV") per share of our Common Stock as most recently published by the Company as of the effective date of redemption and (ii) the volume-weighted average price of our Common Stock, determined in accordance with the Articles Supplementary defining the terms of the Series L Preferred Stock, or (C) in a combination of cash in ILS and our Common Stock, based on the conversion mechanisms set forth in (A) and (B), respectively. We recorded the activity related to our Series L Preferred Stock in permanent equity. |
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Noncontrolling Interests | Noncontrolling Interests—Noncontrolling interests represent the interests in various properties owned by third parties. |
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Restricted Cash | Restricted Cash—Our mortgage loan and hotel management agreements provide for depositing cash into restricted accounts reserved for capital expenditures, free rent, tenant improvement and leasing commission obligations. Restricted cash also includes cash required to be segregated in connection with certain of our loans receivable. |
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Reclassifications | Reclassifications—Certain prior period amounts have been reclassified to conform with the current period presentation. With the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) and the election of the lessor practical expedient not to separate lease and non-lease components, $2,940,000 and $4,391,000 of expense reimbursements were reclassified as rental and other property income on the consolidated statements of operations for the three and six months ended June 30, 2018, respectively, and $411,000 and $569,000 of non-lease component expense reimbursements recognized under the revenue recognition guidance were reclassified as interest and other income on the consolidated statements of operations for the three and six months ended June 30, 2018, respectively. Under the new leasing guidance, bad debt expense associated with changes in the collectability assessment for operating leases shall be recorded as adjustments to rental and other property income rather than rental and other property operating expenses. The impact of this reclassification resulted in a $15,000 and $119,000 reclassification from rental and other property expenses to rental and other property income on the consolidated statements of operations for the three and six months ended June 30, 2018, respectively. |
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Assets Held for Sale and Discontinued Operations | Assets Held for Sale and Discontinued Operations—In the ordinary course of business, we may periodically enter into agreements to dispose of our assets. Some of these agreements are non-binding because either they do not obligate either party to pursue any transactions until the execution of a definitive agreement or they provide the potential buyer with the ability to terminate without penalty or forfeiture of any material deposit, subject to certain specified contingencies, such as completion of due diligence at the discretion of such buyer. We do not classify assets that are subject to such non-binding agreements as held for sale. We classify assets as held for sale, if material, when they meet the necessary criteria, which include: a) management commits to and actively embarks upon a plan to sell the assets, b) the assets to be sold are available for immediate sale in their present condition, c) the sale is expected to be completed within one year under terms usual and customary for such sales and d) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. We generally believe that we meet these criteria when the plan for sale has been approved by our Board of Directors, there are no known significant contingencies related to the sale and management believes it is probable that the sale will be completed within one year. Assets held for sale are recorded at the lower of cost or estimated fair value less cost to sell. In addition, if we were to determine that the asset disposal associated with assets held for sale or disposed of represents a strategic shift, the revenues, expenses and net gain (loss) on dispositions would be recorded in discontinued operations for all periods presented through the date of the applicable disposition. |
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Consolidation Considerations for Our Investments in Real Estate | Consolidation Considerations for Our Investments in Real Estate—ASC 810-10, Consolidation, addresses how a business enterprise should evaluate whether it has a controlling interest in an entity through means other than voting rights that would require the entity to be consolidated. We analyze our investments in real estate in accordance with this accounting standard to determine whether they are variable interest entities, and if so, whether we are the primary beneficiary. Our judgment with respect to our level of influence or control over an entity and whether we are the primary beneficiary of a variable interest entity involves consideration of various factors, including the form of our ownership interest, our voting interest, the size of our investment (including loans), and our ability to participate in major policy-making decisions. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in real estate on our consolidated financial statements. |
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Use of Estimates | Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, 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 period. Actual results could differ from those estimates. |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements—In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02, Leases (Topic 842), which is intended to improve financial reporting about leasing transactions. Under the new guidance, a lessee is required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with previous GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily depends on its classification as a finance or operating lease. However, unlike previous GAAP, which required a lessee to recognize only capital leases on the balance sheet, the new ASU requires a lessee to recognize both types of leases on the balance sheet. The lessor accounting remains largely unchanged from previous GAAP. However, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. In July 2018, the FASB issued ASU No. 2018-10, Leases (Topic 842), which contained targeted improvements to amend inconsistencies and clarify guidance that were brought about by stakeholders. Furthermore, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), which provided the following practical expedients to entities: (1) a transition method that allows entities to apply the new standard at the adoption date and to recognize a cumulative-effect adjustment to the opening balance of retained earnings effective at the adoption date; and (2) the option for lessors to not separate lease and non-lease components provided that certain criteria are met. In December 2018, the FASB issued ASU 2018-20, Leases (Topic 842), which provides lessors the option to elect to account for sales and other similar taxes in which the lessee directly pays third parties to be excluded from the measurement of the contract consideration. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842), which provided narrow amendments, including clarification on transition disclosures to certain aspects of ASU 2016-02. For public entities, these ASUs are effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. The guidance provides a package of transition practical expedients, which must be elected as a package and applied consistently by an entity to all of its leases (including those for which the entity is a lessee or a lessor) when applying this guidance to leases that commenced before the effective date of January 1, 2019: (1) An entity need not reassess whether any expired or existing contracts are or contain leases; (2) an entity need not reassess the lease classification for any expired or existing leases (that is, all leases that were classified as operating leases prior to January 1, 2019 remain classified as operating leases); and (3) an entity need not reassess initial direct costs for any existing leases. The Company has elected all the aforementioned transition practical expedients, including the expedients provided under ASU 2018-11. From a lessee's perspective, the Company has determined that there is one office lease for our lending segment that is material to the consolidated balance sheet. Based on our assessment, the lease has been classified as an operating lease and the Company recorded approximately $362,000 as a right-of-use asset and lease liability on the consolidated balance sheet on the effective date of January 1, 2019. As of June 30, 2019, the right-of-use asset and lease liability balance was approximately $234,000. From a lessor's perspective, the Company did not record a cumulative effect adjustment on January 1, 2019 as the aforementioned package of practical expedients allows us to continue accounting for our then-existing or expired leases under the previous accounting guidance, and we have and will apply the new lease accounting guidance to leases that commence or are modified after the effective date of January 1, 2019. Leases commenced or modified after the effective date have been, and we expect future commencements and modifications of leases in the future will continue to be, classified as operating leases and that we will qualify for the lessor practical expedient provided under ASU 2018-11 to not separate lease and non-lease components. Additionally, if following the effective date, our tenants have made or make payments for taxes or insurance directly to a third-party on behalf of the Company as the lessor, we have excluded and will exclude these amounts from the measurement of the contract consideration and consider these lessee costs. Otherwise, any recoveries of these costs are and will be recognized as lease revenue on a gross basis in our consolidated income statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. The amendments in the ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU No. 2018-19, Financial Instruments-Credit Losses (Topic 326): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified that receivables arising from operating leases are not within the scope of the credit losses standards. In April 2019, the FASB issued ASU 2019-04, Financial Instruments-Credit Losses (Topic 326): Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified the following: (i) an entity’s estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (ii) an entity should consider contractual extension or renewal options that it cannot unconditionally cancel when determining the contractual term over which expected credit losses are measured. In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which allows entities to irrevocably elect the fair value option for existing financial assets on an instrument-by-instrument basis upon adoption of ASU 2016-13. Except for existing held-to-maturity debt securities, the alternative is available for all instruments in the scope of ASC 326-20 that are eligible for the fair value option in ASC 825-10. If an entity elects the fair value option, it will recognize a cumulative-effect adjustment for the difference between the fair value of the instrument and its carrying value. For public entities, the ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2019. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which simplifies and expands the eligible hedging strategies for financial and nonfinancial risks by more closely aligning hedge accounting with a company’s risk management activities, and also simplifies the application of Topic 815, Derivatives and Hedging, through targeted improvements in key practice areas. In addition, the ASU prescribes how hedging results should be presented and requires incremental disclosures. Further, the ASU provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings in the current period. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018. The Company has evaluated the guidance and determined that the effects of ASU 2017-12 do not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public entities will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2019. Early adoption is permitted in any interim period after issuance of the ASU. We are currently in the process of evaluating the impact of adoption of this new accounting guidance on our consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (the “SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The guidance permits the use of the OIS rate based on the SOFR as a U.S. benchmark rate for purposes of applying hedge accounting. The SOFR is a volume-weighted median interest rate that is calculated daily based on overnight transactions from the prior day’s activity in specified segments of the U.S. Treasury repo market. It has been selected as the preferred replacement for the U.S. dollar London Interbank Offered Rate ("LIBOR"), which will be phased out by the end of 2021. For public entities, the ASU is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2019. Early adoption is permitted in any interim period after issuance of the ASU. The Company has evaluated the guidance and determined that the effects of ASU 2018-16 do not have a material impact on our consolidated financial statements. |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Useful Lives of Real Estate | Depreciation and amortization are recorded on a straight-line basis over the estimated useful lives as follows:
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Schedule of Recognized Rental Income | For the three and six months ended June 30, 2019 and 2018, we recognized rental income as follows:
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Reconciliation of Hotel Revenue | Below is a reconciliation of the hotel revenue from contracts with customers to the total hotel segment revenue disclosed in Note 18:
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ACQUISITIONS AND DISPOSITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Sold and Held for Sale | We sold 100% fee-simple interests in the following properties to unrelated third-parties during the six months ended June 30, 2019. Transaction costs related to these sales were expensed as incurred.
The following is the detail of the carrying amounts of assets and liabilities at the time of the sales of the properties that occurred during the six months ended June 30, 2019:
The following is the detail of the carrying amounts of assets and liabilities for the office properties that are classified as held for sale on our consolidated balance sheets as of June 30, 2019 and December 31, 2018:
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Schedule of Asset Acquisitions |
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Schedule of Fair Value of Net Assets Acquired | The fair value of the net assets acquired for the aforementioned acquisition during the six months ended June 30, 2018 are as follows:
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INVESTMENTS IN REAL ESTATE (Tables) |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Real Estate | Investments in real estate consist of the following:
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LOANS RECEIVABLE (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable | Loans receivable consist of the following:
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OTHER INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Liabilities and Related Accumulated Amortization and Accretion | A schedule of our intangible assets and liabilities and related accumulated amortization and accretion as of June 30, 2019 and December 31, 2018 is as follows:
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Schedule of Future Amortization and Accretion of Acquisition Related Intangible Assets | A schedule of future amortization and accretion of acquisition related intangible assets and liabilities as of June 30, 2019, is as follows:
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DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Information on our debt is as follows:
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Future Principal Payments on Debt | Future principal payments on our debt (face value) at June 30, 2019 are as follows:
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EARNINGS PER SHARE ("EPS") (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the Numerator and Denominator Used in Computing Basic and Diluted Per-share Computations | The following table reconciles the numerator and denominator used in computing our basic and diluted per-share amounts for net income (loss) attributable to common stockholders for the three and six months ended June 30, 2019 and 2018:
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REDEEMABLE PREFERRED STOCK (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Temporary Equity Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared | Cash dividends declared on our Series A Preferred Stock for the six months ended June 30, 2019 and 2018 consist of the following:
Cash dividends per share of Common Stock declared during the six months ended June 30, 2019 and 2018 consist of the following:
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Dividends Accumulated | Accumulated cash dividends on our Series L Preferred Stock for the three and six months ended June 30, 2019 and 2018, are included in the numerator for purposes of calculating basic and diluted net income (loss) attributable to common stockholders per share (Note 9), and consist of the following:
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STOCKHOLDERS' EQUITY (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared | Cash dividends declared on our Series A Preferred Stock for the six months ended June 30, 2019 and 2018 consist of the following:
Cash dividends per share of Common Stock declared during the six months ended June 30, 2019 and 2018 consist of the following:
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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Balance of Each Component of AOCI Related to Interest Rate Swaps | The changes in the balance of each component of AOCI related to our interest rate swaps designated as cash flow hedges are as follows:
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value and Classification of Derivative Financial Instruments | The table below presents the fair value of our derivative financial instruments as well as their classification on our consolidated balance sheets:
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Fair Values of Financial Instrument Not Recorded at Fair Value on a Recurring Basis | The estimated fair values of those financial instruments which are not recorded at fair value on a recurring basis on our consolidated balance sheets are as follows:
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RELATED-PARTY TRANSACTIONS (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Management Fees Calculation | The fee is calculated as a percentage of the daily average adjusted fair value of CIM Urban's assets:
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FUTURE MINIMUM LEASE RENTALS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases, Operating [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Rental Revenue Under Long-Term Operating Leases | Future minimum rental revenue under long-term operating leases at June 30, 2019, excluding tenant reimbursements of certain costs, are as follows:
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CONCENTRATIONS (Tables) |
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Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration Risks From Properties | Our revenue concentrations from properties are as follows:
Our real estate investments concentrations from properties are as follows:
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SEGMENT DISCLOSURE (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Net Operating Income | The net operating income of our segments for the three and six months ended June 30, 2019 and 2018 is as follows:
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Reconciliation of Segment Net Operating Income to Net Income Attributable to the Company | A reconciliation of our segment net operating income to net income attributable to the Company for the three and six months ended June 30, 2019 and 2018 is as follows:
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Segment Condensed Assets | The condensed assets for each of the segments as of June 30, 2019 and December 31, 2018, along with capital expenditures and loan originations for the six months ended June 30, 2019 and 2018, are as follows:
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Segment Capital Expenditures |
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ORGANIZATION AND OPERATIONS (Details) |
Sep. 03, 2019 |
Jun. 30, 2019
$ / shares
shares
|
Dec. 31, 2018
$ / shares
shares
|
---|---|---|---|
Class of Stock [Line Items] | |||
Common stock, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | |
Common stock, shares authorized (in shares) | shares | 900,000,000 | 900,000,000 | |
Preferred stock, shares authorized (in shares) | shares | 100,000,000 | ||
Series L Preferred Stock | |||
Class of Stock [Line Items] | |||
Preferred stock, par value (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | |
Forecast | Subsequent Event | |||
Class of Stock [Line Items] | |||
Reverse stock split ratio, common stock | 0.3333 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments in Real Estate (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Investments in Real Estate | |||||
Impairment of real estate | $ 2,800,000 | $ 66,200,000 | $ 0 | $ 69,000,000 | $ 0 |
Buildings and improvements | Minimum | |||||
Investments in Real Estate | |||||
Estimated useful lives | 15 years | ||||
Buildings and improvements | Maximum | |||||
Investments in Real Estate | |||||
Estimated useful lives | 40 years | ||||
Furniture, fixtures, and equipment | Minimum | |||||
Investments in Real Estate | |||||
Estimated useful lives | 3 years | ||||
Furniture, fixtures, and equipment | Maximum | |||||
Investments in Real Estate | |||||
Estimated useful lives | 5 years |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Fixed lease payments | $ 20,640,000 | $ 34,114,000 | $ 51,536,000 | $ 67,315,000 |
Variable lease payments | 1,779,000 | 3,711,000 | 4,464,000 | 5,654,000 |
Rental and other property income | 22,419,000 | 37,825,000 | 56,000,000 | 72,969,000 |
Hotel income | 9,549,000 | 10,160,000 | 19,353,000 | 19,849,000 |
Tenant recoveries outside of lease agreements | 0 | 275,000 | 205,000 | 278,000 |
Remaining performance obligations | 0 | 0 | ||
Rental and other property income | ||||
Disaggregation of Revenue [Line Items] | ||||
Hotel income | 736,000 | 733,000 | 1,472,000 | 1,496,000 |
Interest and other income | ||||
Disaggregation of Revenue [Line Items] | ||||
Hotel income | 45,000 | 54,000 | 94,000 | 93,000 |
Hotel income | ||||
Disaggregation of Revenue [Line Items] | ||||
Hotel income | $ 10,330,000 | $ 10,947,000 | $ 20,919,000 | $ 21,438,000 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans Receivable (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2015 |
Mar. 11, 2014 |
|
Loans receivable | |||||||
Unamortized retained loan discounts | $ 7,557,000 | $ 7,557,000 | $ 7,234,000 | ||||
Loan receivable, nonaccrual, past due period (more than) | 60 days | ||||||
Impairment on loans receivable | 1,000 | $ 0 | $ 58,000 | $ 0 | |||
SBA 7(a) loans receivable, subject to secured borrowings | |||||||
Loans receivable | |||||||
Unamortized acquisition discounts related to sold loans | $ 15,951,000 | ||||||
PMC Commercial | |||||||
Loans receivable | |||||||
Discount on acquisition | $ 33,907,000 | ||||||
Acquisition discount | $ 808,000 | $ 808,000 | $ 884,000 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Rent Receivable and Charges (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Deferred Rent Receivable and Charges | ||
Deferred rent receivable | $ 18,531 | $ 52,366 |
Deferred leasing costs | 16,588 | 51,152 |
Deferred leasing costs, accumulated amortization | 6,775 | 23,910 |
Deferred offering costs | 4,610 | 4,213 |
Other deferred costs | $ 204 | $ 409 |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Redeemable Preferred Stock (Details) |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Preferred stock, percentage of stated value | 100.00% |
Preferred stock redemption, trading days prior to redemption | 20 days |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued Accounting Pronouncements (Details) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019
USD ($)
contract
|
Jan. 01, 2019
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of lease contracts | contract | 1 | |
Right-of use asset | $ 234 | |
Lease liability | $ 234 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of use asset | $ 362 | |
Lease liability | $ 362 |
ACQUISITIONS AND DISPOSITIONS - Acquisitions (Details) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jan. 18, 2018
USD ($)
ft²
|
Jun. 30, 2019
acquistion
|
Dec. 31, 2017
USD ($)
|
|
Business Acquisition [Line Items] | |||
Number of business acquisitions | acquistion | 0 | ||
9460 Wilshire Boulevard in Los Angeles, California | |||
Business Acquisition [Line Items] | |||
Percent of ownership acquired | 100.00% | ||
Square Feet | ft² | 91,750 | ||
Purchase Price | $ | $ 132,000 | ||
Non-refundable deposit | $ | $ 20,000 | ||
Asset acquisitions transaction costs | $ | $ 48 | ||
9460 Wilshire Boulevard in Los Angeles, California - Office Space | |||
Business Acquisition [Line Items] | |||
Square Feet | ft² | 68,866 | ||
9460 Wilshire Boulevard in Los Angeles, California - Retail Space | |||
Business Acquisition [Line Items] | |||
Square Feet | ft² | 22,884 |
INVESTMENTS IN REAL ESTATE (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Real Estate [Abstract] | |||||
Land | $ 134,422 | $ 134,422 | $ 266,410 | ||
Land improvements | 2,713 | 2,713 | 18,368 | ||
Buildings and improvements | 437,683 | 437,683 | 912,892 | ||
Furniture, fixtures, and equipment | 3,683 | 3,683 | 4,245 | ||
Tenant improvements | 34,038 | 34,038 | 133,487 | ||
Work in progress | 7,152 | 7,152 | 9,234 | ||
Investments in real estate | 619,691 | 619,691 | 1,344,636 | ||
Accumulated depreciation | (115,389) | (115,389) | (303,699) | ||
Net investments in real estate | 504,302 | 504,302 | $ 1,040,937 | ||
Depreciation expense | $ 5,815 | $ 10,907 | $ 13,752 | $ 21,586 |
LOANS RECEIVABLE (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Loans receivable | ||
Loans receivable | $ 71,875 | $ 82,641 |
Deferred capitalized costs | 1,143 | 1,309 |
Loan loss reserves | (533) | (702) |
Loans receivable, net | $ 72,485 | $ 83,248 |
Loans, percent current | 99.90% | 99.70% |
SBA 7(a) loans receivable, subject to loan-backed notes | ||
Loans receivable | ||
Loans receivable | $ 32,966 | $ 36,847 |
SBA 7(a) loans receivable, subject to credit risk | ||
Loans receivable | ||
Loans receivable | 23,004 | 29,385 |
SBA 7(a) loans receivable, subject to secured borrowings | ||
Loans receivable | ||
Loans receivable | 15,905 | 16,409 |
Substandard | ||
Loans receivable | ||
Loans receivable, net | $ 584 | $ 235 |
Hospitality Industry | Loans subject to credit risk | ||
Loans receivable | ||
Concentration risk, percent | 98.70% | 98.30% |
DEBT - Schedule of Future Principal Payments (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Future Principal Payments on Debt | |
2019 (Six months ending December 31, 2019) | $ 1,224 |
2020 | 2,515 |
2021 | 2,598 |
2022 | 2,684 |
2023 | 2,780 |
Thereafter | 155,045 |
Total Debt | 166,846 |
Mortgages Payable | |
Future Principal Payments on Debt | |
2019 (Six months ending December 31, 2019) | 0 |
2020 | 0 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
Thereafter | 97,100 |
Total Debt | 97,100 |
Secured Borrowings Principal | |
Future Principal Payments on Debt | |
2019 (Six months ending December 31, 2019) | 281 |
2020 | 584 |
2021 | 616 |
2022 | 650 |
2023 | 686 |
Thereafter | 12,487 |
Total Debt | 15,304 |
Other Debt | |
Future Principal Payments on Debt | |
2019 (Six months ending December 31, 2019) | 943 |
2020 | 1,931 |
2021 | 1,982 |
2022 | 2,034 |
2023 | 2,094 |
Thereafter | 45,458 |
Total Debt | $ 54,442 |
STOCK-BASED COMPENSATION PLANS (Details) - Restricted share awards - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jul. 31, 2019 |
May 31, 2019 |
May 31, 2018 |
Jun. 30, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Share-based compensation plans | ||||||||
Unrecognized compensation expense | $ 167 | $ 167 | ||||||
Independent Directors | ||||||||
Share-based compensation plans | ||||||||
Granted to each individual (in shares) | 2,667 | 3,378 | 3,195 | |||||
Granted (in shares) | 10,668 | 10,134 | 9,585 | |||||
Award vesting period | 1 year | 1 year | 1 year | |||||
Stock-based compensation expense | $ 44 | $ 48 | $ 82 | $ 86 | ||||
Subsequent Event | Independent Directors | ||||||||
Share-based compensation plans | ||||||||
Granted to each individual (in shares) | 245 | |||||||
Granted (in shares) | 980 |
EARNINGS PER SHARE (''EPS'') (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Numerator: | ||||
Net income (loss) attributable to common stockholders | $ 48,260 | $ (1,876) | $ 335,891 | $ (4,902) |
Redeemable preferred stock dividends declared on dilutive shares | 659 | 0 | 1,151 | 0 |
Diluted net income (loss) attributable to common stockholders | $ 48,919 | $ (1,876) | $ 337,042 | $ (4,902) |
Denominator: | ||||
Basic weighted average shares outstanding (in shares) | 43,791 | 43,791 | 43,793 | 43,788 |
Effect of dilutive securities—contingently issuable shares and stock options (in shares) | 2,062 | 0 | 2,011 | 0 |
Diluted weighted average shares and common stock equivalents outstanding (in shares) | 45,853 | 43,791 | 45,804 | 43,788 |
Net income (loss) attributable to common stockholders per share: | ||||
Basic (in usd per share) | $ 1.10 | $ (0.04) | $ 7.67 | $ (0.11) |
Diluted (in usd per share) | $ 1.07 | $ (0.04) | $ 7.36 | $ (0.11) |
REDEEMABLE PREFERRED STOCK - Dividends Declared (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jun. 04, 2019 |
Feb. 20, 2019 |
Jun. 04, 2018 |
Mar. 06, 2018 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
|
Class of Stock [Line Items] | ||||||||
Cash Dividends Declared | $ 1,150 | $ 1,010 | $ 662 | $ 493 | ||||
Series A Preferred Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Series A Preferred Stock outstanding (in shares) | 3,601,721 | 3,149,924 | 2,149,863 | 1,674,841 | ||||
Cash Dividends Declared | $ 1,150 | $ 1,010 | $ 662 | $ 493 |
REDEEMABLE PREFERRED STOCK - Dividends Accumulated (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Class of Stock [Line Items] | ||||||
Dividends Accumulated | $ 4,302 | $ 3,814 | $ 8,464 | $ 7,459 | ||
Series L Preferred Stock | ||||||
Class of Stock [Line Items] | ||||||
Series L Preferred Stock outstanding (in shares) | 8,080,740 | 8,080,740 | 8,080,740 | 8,080,740 | 8,080,740 | 8,080,740 |
Dividends Accumulated | $ 3,152 | $ 3,152 | $ 3,152 | $ 3,152 |
STOCKHOLDERS' EQUITY - Share Repurchases (Details) - Urban Partners II, LLC - December 2017 Share Repurchase - Common Stock $ / shares in Units, $ in Thousands |
Dec. 18, 2017
USD ($)
$ / shares
shares
|
---|---|
Equity, Class of Treasury Stock [Line Items] | |
Stock repurchased and retired (in shares) | shares | 14,090,909 |
Stock repurchased and retired | $ | $ 310,000 |
Stock repurchased and retired (in usd per share) | $ / shares | $ 22 |
STOCKHOLDERS' EQUITY - Warrants (Details) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Sep. 09, 2019 |
Sep. 03, 2019
shares
|
Jun. 30, 2019
USD ($)
shares
|
Jun. 30, 2018
USD ($)
|
|
Registration statement | ||||
Warrants issued (in shares) | 3,614,493 | |||
Net proceeds from issuance of warrants | $ | $ 40 | $ 40 | ||
Registration Statement | ||||
Registration statement | ||||
Warrant right to purchase a share of common stock (in shares) | 0.25 | |||
Premium of the exercise price of the warrant as a percent to net asset value of common stock | 15.00% | |||
Series A Preferred Unit | ||||
Registration statement | ||||
Net proceeds from issuance of warrants | $ | $ 244 | |||
Subsequent Event | Forecast | ||||
Registration statement | ||||
Multiplier in exercise price of warrants effective upon reverse stock split | 3 | |||
Warrant right to purchase a share of common stock, conversion ratio, effective upon reverse stock split | 0.3333 | |||
Warrant right to purchase a share of common stock effective upon reverse stock split (in shares) | 0.0833 |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - AOCI (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 909,507 | $ 624,485 | $ 617,275 | $ 626,705 |
Other comprehensive income before reclassifications | 0 | 560 | 0 | 1,759 |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | (153) | (1,806) | (169) |
Net current period other comprehensive income | 0 | 407 | (1,806) | 1,590 |
Ending balance | 966,260 | 624,440 | 966,260 | 624,440 |
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 0 | 2,814 | 1,806 | 1,631 |
Ending balance | $ 0 | $ 3,221 | $ 0 | $ 3,221 |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Other assets | Fair Value, Measurements, Recurring | Interest rate swaps | Level 2 | ||
Fair value of financial instruments | ||
Derivative assets | $ 0 | $ 1,630 |
FUTURE MINIMUM LEASE RENTALS (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Leases, Operating [Abstract] | |
2019 (Six months ending December 31, 2019) | $ 24,084 |
2020 | 45,978 |
2021 | 39,323 |
2022 | 36,141 |
2023 | 33,521 |
Thereafter | 82,223 |
Total | $ 261,270 |
SEGMENT DISCLOSURE - Operating Income (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019
USD ($)
property
|
Jun. 30, 2018
USD ($)
property
|
Jun. 30, 2019
USD ($)
property
|
Jun. 30, 2018
USD ($)
property
|
|
Segment disclosure | ||||
Number of types of commercial real estate properties | property | 2 | 2 | 2 | 2 |
Revenues | $ 36,856 | $ 51,544 | $ 84,133 | $ 99,838 |
Expenses: | ||||
Interest expense | 2,550 | 6,811 | 6,595 | 13,444 |
General and administrative | 1,621 | 1,915 | 3,409 | 5,291 |
EXPENSES | 39,229 | 49,303 | 172,146 | 96,587 |
Segment net operating income | 52,848 | 2,241 | 344,789 | 3,251 |
Reportable segments | ||||
Expenses: | ||||
Segment net operating income | 18,012 | 29,352 | 42,827 | 57,577 |
Reportable segments | Office | ||||
Segment disclosure | ||||
Revenues | 22,050 | 37,889 | 55,495 | 72,701 |
Expenses: | ||||
Operating | 8,913 | 13,928 | 22,472 | 25,311 |
General and administrative | 202 | 98 | 356 | 979 |
EXPENSES | 9,115 | 14,026 | 22,828 | 26,290 |
Segment net operating income | 12,935 | 23,863 | 32,667 | 46,411 |
Reportable segments | Hotel | ||||
Segment disclosure | ||||
Revenues | 10,330 | 10,947 | 20,919 | 21,438 |
Expenses: | ||||
Operating | 6,745 | 6,837 | 13,439 | 13,370 |
General and administrative | 63 | 0 | 77 | 18 |
EXPENSES | 6,808 | 6,837 | 13,516 | 13,388 |
Segment net operating income | 3,522 | 4,110 | 7,403 | 8,050 |
Reportable segments | Lending | ||||
Segment disclosure | ||||
Revenues | 2,977 | 2,708 | 5,901 | 5,699 |
Expenses: | ||||
Interest expense | 536 | 300 | 1,118 | 484 |
Fees to related party | 551 | 639 | 1,188 | 1,240 |
General and administrative | 335 | 390 | 838 | 859 |
EXPENSES | 1,422 | 1,329 | 3,144 | 2,583 |
Segment net operating income | $ 1,555 | $ 1,379 | $ 2,757 | $ 3,116 |
SEGMENT DISCLOSURE - Reconciliation Of Segment Operating Income (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Segment disclosure | ||||||
Interest and other income | $ 4,888,000 | $ 3,559,000 | $ 8,780,000 | $ 7,020,000 | ||
Asset management and other fees to related parties | (4,288,000) | (6,143,000) | (10,174,000) | (12,354,000) | ||
Interest expense | (2,550,000) | (6,811,000) | (6,595,000) | (13,444,000) | ||
General and administrative | (1,621,000) | (1,915,000) | (3,409,000) | (5,291,000) | ||
Transaction costs | (216,000) | (344,000) | (260,000) | (344,000) | ||
Depreciation and amortization | (7,185,000) | (13,325,000) | (16,815,000) | (26,473,000) | ||
Loss on early extinguishment of debt | (4,911,000) | 0 | (29,982,000) | 0 | ||
Impairment of real estate | (2,800,000) | $ (66,200,000) | 0 | (69,000,000) | 0 | |
Gain on sale of real estate | 55,221,000 | 0 | 432,802,000 | 0 | ||
Income before provision for income taxes | 52,848,000 | 2,241,000 | 344,789,000 | 3,251,000 | ||
Provision for income taxes | (281,000) | (292,000) | (599,000) | (680,000) | ||
NET INCOME | 52,567,000 | $ 291,623,000 | 1,949,000 | $ 622,000 | 344,190,000 | 2,571,000 |
Net (income) loss attributable to noncontrolling interests | (1,000) | (12,000) | 173,000 | (16,000) | ||
NET INCOME ATTRIBUTABLE TO THE COMPANY | 52,566,000 | 1,937,000 | 344,363,000 | 2,555,000 | ||
Reportable segments | ||||||
Segment disclosure | ||||||
Income before provision for income taxes | 18,012,000 | 29,352,000 | 42,827,000 | 57,577,000 | ||
Corporate and Reconciling Items | ||||||
Segment disclosure | ||||||
Interest and other income | 1,499,000 | 0 | 1,818,000 | 0 | ||
Asset management and other fees to related parties | (3,737,000) | (5,504,000) | (8,986,000) | (11,114,000) | ||
Interest expense | (2,014,000) | (6,511,000) | (5,477,000) | (12,960,000) | ||
General and administrative | $ (1,021,000) | $ (1,427,000) | $ (2,138,000) | $ (3,435,000) |
SEGMENT DISCLOSURE - Assets and Capital Expenditures and Loan Originations (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Segment disclosure | |||
Total assets | $ 1,196,503 | $ 1,342,401 | |
Total capital expenditures | 5,520 | $ 10,864 | |
Loan originations | 18,523 | 28,460 | |
Total capital expenditures and loan originations | 24,043 | 39,324 | |
Reportable segments | Office | |||
Segment disclosure | |||
Total assets | 643,226 | 1,094,269 | |
Total capital expenditures | 4,363 | 10,040 | |
Reportable segments | Hotel | |||
Segment disclosure | |||
Total assets | 107,042 | 105,845 | |
Total capital expenditures | 1,157 | $ 824 | |
Reportable segments | Lending | |||
Segment disclosure | |||
Total assets | 85,873 | 97,465 | |
Non-segment | |||
Segment disclosure | |||
Total assets | $ 360,362 | $ 44,822 |
Label | Element | Value |
---|---|---|
Dividends Payable | us-gaap_DividendsPayableCurrentAndNoncurrent | $ 662,000 |
Dividends Payable | us-gaap_DividendsPayableCurrentAndNoncurrent | $ 1,150,000 |
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