Investments (Tables)
|
9 Months Ended |
Sep. 30, 2019 |
|---|
| Real Estate [Abstract] |
|
| Summary of Real Estate and Loan Activity |
During the nine months ended September 30, 2019, the Company had the following owned real estate activity, net of accumulated depreciation and amortization (dollars in thousands):
|
|
|
Number of Properties |
|
|
Dollar Amount of Investments |
|
|
|
|
Held in Use |
|
|
Held for Sale |
|
|
Total |
|
|
Held in Use |
|
|
Held for Sale |
|
|
Total |
|
|
Gross balance, December 31, 2018 |
|
|
1,459 |
|
|
|
3 |
|
|
|
1,462 |
|
|
$ |
5,054,524 |
|
|
$ |
22,064 |
|
|
$ |
5,076,588 |
|
|
Acquisitions/improvements (1)(2) |
|
|
195 |
|
|
|
— |
|
|
|
195 |
|
|
|
753,076 |
|
|
|
— |
|
|
|
753,076 |
|
|
Dispositions of real estate (3)(4) |
|
|
(11 |
) |
|
|
(23 |
) |
|
|
(34 |
) |
|
|
(61,285 |
) |
|
|
(134,699 |
) |
|
|
(195,984 |
) |
|
Transfers to Held for Sale |
|
|
(25 |
) |
|
|
25 |
|
|
|
— |
|
|
|
(126,883 |
) |
|
|
126,883 |
|
|
|
— |
|
|
Transfers from Held for Sale |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Impairments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,302 |
) |
|
|
(4,929 |
) |
|
|
(13,231 |
) |
|
Write-off of intangibles |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,267 |
) |
|
|
(2,945 |
) |
|
|
(10,212 |
) |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Gross balance, September 30, 2019 |
|
|
1,618 |
|
|
|
5 |
|
|
|
1,623 |
|
|
|
5,603,863 |
|
|
|
6,374 |
|
|
|
5,610,237 |
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(689,346 |
) |
|
|
(778 |
) |
|
|
(690,124 |
) |
|
Accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(112,788 |
) |
|
|
(78 |
) |
|
|
(112,866 |
) |
|
Net balance, September 30, 2019 (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,801,729 |
|
|
$ |
5,518 |
|
|
$ |
4,807,247 |
|
|
(1) |
Includes investments of $30.2 million in revenue producing capitalized expenditures, as well as $4.9 million of non-revenue producing capitalized expenditures during the nine months ended September 30, 2019. |
|
(2) |
62 properties were acquired through sale-lease back transactions, representing $418.5 million of investment, during the nine months ended September 30, 2019. |
|
(3) |
For the nine months ended September 30, 2019, the total gain on disposal of assets for properties held in use and held for sale was $38.8 million and $32.0 million, respectively. |
|
(4) |
Includes one deed-in-lieu property with a real estate investment of $0.8 million that was transferred to the lender during the nine months ended September 30, 2019. |
|
(5) |
Reconciliation of total owned investments to the accompanying consolidated balance sheet at September 30, 2019 is as follows: |
|
Held in Use land and buildings, net of accumulated depreciation |
|
$ |
4,592,169 |
|
|
Intangible lease assets, net |
|
|
|
|
311,597 |
|
|
Real estate assets under direct financing leases, net |
|
|
|
|
14,478 |
|
|
Real estate assets held for sale, net |
|
|
|
|
5,518 |
|
|
Intangible lease liabilities, net |
|
|
|
|
(116,515 |
) |
|
Net balance |
|
|
|
$ |
4,807,247 |
|
During the nine months ended September 30, 2019, the Company had the following loan activity:
|
|
|
Mortgage Loans |
|
|
Other Notes |
|
|
Total |
|
|
|
|
Properties |
|
|
Investment |
|
|
Investment |
|
|
Investment |
|
|
Principal, December 31, 2018 |
|
|
52 |
|
|
$ |
42,660 |
|
|
$ |
2,082 |
|
|
$ |
44,742 |
|
|
Acquisitions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Dispositions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Principal payments and payoffs |
|
|
(9 |
) |
|
|
(9,220 |
) |
|
|
(83 |
) |
|
|
(9,303 |
) |
|
Allowance for loan losses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Principal, September 30, 2019 |
|
|
43 |
|
|
$ |
33,440 |
|
|
$ |
1,999 |
|
|
$ |
35,439 |
|
|
| Schedule of Operating Lease Income |
The following table summarizes the components of rental income recognized on these operating leases in the accompanying consolidated statements of operations (in thousands):
|
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
Base cash rent |
|
$ |
100,962 |
|
|
$ |
92,292 |
|
|
$ |
296,179 |
|
|
$ |
372,126 |
|
|
Variable cash rent (including reimbursables) |
|
|
2,823 |
|
|
|
3,641 |
|
|
|
9,403 |
|
|
|
12,762 |
|
|
Straight-line rent, net of bad debt expense (1) |
|
|
4,770 |
|
|
|
3,582 |
|
|
|
12,162 |
|
|
|
12,670 |
|
|
Amortization of above- and below- market lease intangibles, net (2) |
|
|
956 |
|
|
|
1,312 |
|
|
|
2,340 |
|
|
|
3,684 |
|
|
Total rental income |
|
$ |
109,511 |
|
|
$ |
100,827 |
|
|
$ |
320,084 |
|
|
$ |
401,242 |
|
|
(1) |
As a result of the Company's adoption of ASU 2016-02 on January 1, 2019, the Company reclassified bad debt expense to rental income on a prospective basis. See Note 2 for additional detail. |
|
(2) |
Excludes amortization of in-place leases of $7.2 million and $7.0 million for the three months ended September 30, 2019 and 2018, respectively, and $20.4 million and $21.2 million for the nine months ended September 30, 2019 and 2018, respectively, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations. |
|
| Schedule of Minimum Future Contractual Rent to be Received from Operating Lease |
Scheduled minimum future contractual rent to be received under the remaining non-cancelable term of these operating leases (including contractual fixed rent increases occurring on or after October 1, 2019) at September 30, 2019 are as follows (in thousands):
|
|
|
September 30,
2019 |
|
|
Remainder of 2019 |
|
$ |
102,482 |
|
|
2020 |
|
|
406,783 |
|
|
2021 |
|
|
390,425 |
|
|
2022 |
|
|
371,402 |
|
|
2023 |
|
|
350,929 |
|
|
Thereafter |
|
|
2,736,420 |
|
|
Total future minimum rentals |
|
$ |
4,358,441 |
|
|
| Schedule of Lease Intangible Assets and Liabilities, Net of Accumulated Amortization |
The following table details lease intangible assets and liabilities, net of accumulated amortization (in thousands):
|
|
|
September 30,
2019 |
|
|
December 31,
2018 |
|
|
In-place leases |
|
$ |
402,902 |
|
|
$ |
381,143 |
|
|
Above-market leases |
|
|
68,970 |
|
|
|
62,902 |
|
|
Less: accumulated amortization |
|
|
(160,275 |
) |
|
|
(149,582 |
) |
|
Intangible lease assets, net |
|
$ |
311,597 |
|
|
$ |
294,463 |
|
|
|
|
|
|
|
|
|
|
|
|
Below-market leases |
|
$ |
164,001 |
|
|
$ |
167,527 |
|
|
Less: accumulated amortization |
|
|
(47,486 |
) |
|
|
(47,365 |
) |
|
Intangible lease liabilities, net |
|
$ |
116,515 |
|
|
$ |
120,162 |
|
|
| Schedule of Components of Real Estate Investments Held Under Direct Financing Leases |
The components of real estate investments held under direct financing leases were as follows (in thousands):
|
|
|
September 30,
2019 |
|
|
December 31,
2018 |
|
|
Minimum lease payments receivable |
|
$ |
4,448 |
|
|
$ |
5,390 |
|
|
Estimated residual value of leased assets |
|
|
14,256 |
|
|
|
20,097 |
|
|
Unearned income |
|
|
(4,226 |
) |
|
|
(5,198 |
) |
|
Real estate assets under direct financing leases, net |
|
$ |
14,478 |
|
|
$ |
20,289 |
|
|
| Schedule of Minimum Future Contractual Rent to be Received from Direct Financing Leases |
Scheduled minimum future payments to be received under the remaining non-cancelable term of these direct financing leases at September 30, 2019 are as follows (in thousands):
|
|
|
September 30,
2019 |
|
|
Remainder of 2019 |
|
$ |
280 |
|
|
2020 |
|
|
577 |
|
|
2021 |
|
|
527 |
|
|
2022 |
|
|
541 |
|
|
2023 |
|
|
554 |
|
|
Thereafter |
|
|
1,969 |
|
|
Total future minimum rentals |
|
$ |
4,448 |
|
|
| Schedule of Loans Receivable, Net of Premium and Allowance for Loan Losses |
The following table details loans receivable, net of premiums, discounts and allowance for loan losses (dollars in thousands):
|
|
|
September 30,
2019 |
|
|
December 31,
2018 |
|
|
Mortgage loans - principal |
|
$ |
33,440 |
|
|
$ |
42,660 |
|
|
Mortgage loans - premiums, net of amortization |
|
|
1,308 |
|
|
|
2,527 |
|
|
Allowance for loan losses |
|
|
— |
|
|
|
— |
|
|
Mortgage loans, net |
|
|
34,748 |
|
|
|
45,187 |
|
|
Other notes receivable - principal |
|
|
1,999 |
|
|
|
2,082 |
|
|
Other notes receivable - discounts, net of amortization |
|
|
(177 |
) |
|
|
(225 |
) |
|
Allowance for loan losses |
|
|
— |
|
|
|
— |
|
|
Other notes receivable, net |
|
|
1,822 |
|
|
|
1,857 |
|
|
Total loans receivable, net |
|
$ |
36,570 |
|
|
$ |
47,044 |
|
|
| Summary of Total Impairment Losses Recognized |
The following table summarizes total impairment losses recognized in the accompanying consolidated statements of operations (in thousands):
|
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
Real estate and intangible asset impairment |
|
$ |
5,932 |
|
|
$ |
1,279 |
|
|
$ |
13,231 |
|
|
$ |
17,214 |
|
|
Recovery of loans receivable, previously impaired |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17 |
) |
|
Total impairment loss |
|
$ |
5,932 |
|
|
$ |
1,279 |
|
|
$ |
13,231 |
|
|
$ |
17,197 |
|
|