ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 56-2466617 | |
(State or other jurisdiction incorporation or organization) | (I.R.S. Employer of Identification No.) | |
521 5th Avenue, 30th Floor, New York, NY 10175 (Address of principal executive offices – zip code) | ||
(212) 297-1000 (Registrant’s telephone number, including area code) |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ |
(Do not check if a smaller reporting company) |
Page | |||
PART I. | FINANCIAL INFORMATION | ||
ITEM 1. | |||
ITEM 2. | |||
ITEM 3A. | |||
ITEM 4. | |||
PART II. | |||
ITEM 1. | |||
ITEM 1A. | |||
ITEM 2. | |||
ITEM 3. | |||
ITEM 4. | |||
ITEM 5. | |||
ITEM 6. | |||
PART I. | FINANCIAL INFORMATION |
ITEM I. | FINANCIAL STATEMENTS |
June 30, 2016 | December 31, 2015 | ||||||
Assets: | |||||||
Real estate investments, at cost: | |||||||
Land | $ | 763,248 | $ | 702,557 | |||
Building and improvements | 3,627,815 | 3,313,747 | |||||
Less: accumulated depreciation | (142,824 | ) | (84,627 | ) | |||
Total real estate investments, net | 4,248,239 | 3,931,677 | |||||
Cash and cash equivalents | 185,141 | 128,031 | |||||
Restricted cash | 65,748 | 17,354 | |||||
Investment in unconsolidated equity investments | 145,252 | 580,000 | |||||
Servicing advances receivable | — | 1,382 | |||||
Retained CDO bonds | 9,322 | 7,471 | |||||
Assets held for sale, net | 10,074 | 420,485 | |||||
Tenant and other receivables, net | 57,572 | 34,234 | |||||
Acquired lease assets, net of accumulated amortization of $112,588 and $54,323 | 641,829 | 682,174 | |||||
Deferred costs, net of accumulated amortization of $2,319 and $892 | 21,829 | 13,950 | |||||
Goodwill | 3,223 | 3,568 | |||||
Other assets | 21,998 | 14,192 | |||||
Total assets | $ | 5,410,227 | $ | 5,834,518 | |||
Liabilities and Equity: | |||||||
Liabilities: | |||||||
Senior unsecured revolving credit facility | $ | 169,950 | $ | 296,724 | |||
Exchangeable senior notes, net | 107,550 | 106,581 | |||||
Mortgage notes payable, net | 532,981 | 530,222 | |||||
Senior unsecured notes, net | 148,953 | 99,124 | |||||
Senior unsecured term loans, net | 1,225,000 | 1,225,000 | |||||
Total long-term debt, net | 2,184,434 | 2,257,651 | |||||
Accounts payable and accrued expenses | 35,339 | 59,808 | |||||
Dividends payable | 46,855 | 8,980 | |||||
Accrued interest payable | 5,321 | 4,546 | |||||
Deferred revenue | 30,142 | 36,031 | |||||
Below market lease liabilities, net of accumulated amortization of $28,785 and $17,083 | 241,059 | 242,456 | |||||
Liabilities related to assets held for sale | 371 | 291,364 | |||||
Derivative instruments, at fair value | 36,735 | 3,442 | |||||
Other liabilities | 11,835 | 8,271 | |||||
Total liabilities | 2,592,091 | 2,912,549 | |||||
Commitments and contingencies | |||||||
Noncontrolling interest in operating partnership | 10,559 | 10,892 | |||||
Equity: | |||||||
Common shares, par value $0.01, 421,696,772 and 420,523,153 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively. | 4,217 | 4,205 | |||||
Series A cumulative redeemable preferred shares, par value $0.01, liquidation preference $87,500, 3,500,000 shares authorized, issued and outstanding at June 30, 2016 and December 31, 2015. | 84,394 | 84,394 | |||||
Additional paid-in-capital | 3,882,921 | 3,879,932 | |||||
Accumulated other comprehensive loss | (44,106 | ) | (5,751 | ) | |||
Accumulated deficit | (1,119,455 | ) | (1,051,454 | ) | |||
Total shareholders' equity | 2,807,971 | 2,911,326 | |||||
Noncontrolling interest in other partnerships | (394 | ) | (249 | ) | |||
Total equity | 2,807,577 | 2,911,077 | |||||
Total liabilities and equity | $ | 5,410,227 | $ | 5,834,518 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues | |||||||||||||||
Rental revenue | $ | 98,517 | $ | 39,565 | $ | 190,612 | $ | 70,755 | |||||||
Third-party management fees | 18,310 | 4,232 | 23,356 | 12,418 | |||||||||||
Operating expense reimbursements | 21,905 | 9,738 | 44,487 | 17,876 | |||||||||||
Investment income | 503 | 525 | 946 | 763 | |||||||||||
Other income | 190 | 87 | 569 | 270 | |||||||||||
Total revenues | 139,425 | 54,147 | 259,970 | 102,082 | |||||||||||
Operating Expenses | |||||||||||||||
Property operating expenses | 23,510 | 9,572 | 47,679 | 17,955 | |||||||||||
Property management expenses | 5,591 | 4,611 | 10,112 | 9,777 | |||||||||||
Depreciation and amortization | 60,538 | 24,716 | 118,786 | 43,414 | |||||||||||
General and administrative expenses | 8,005 | 4,778 | 15,727 | 9,551 | |||||||||||
Acquisition and merger-related expenses | 4,312 | 3,455 | 4,722 | 6,961 | |||||||||||
Total operating expenses | 101,956 | 47,132 | 197,026 | 87,658 | |||||||||||
Operating Income | 37,469 | 7,015 | 62,944 | 14,424 | |||||||||||
Other Expense: | |||||||||||||||
Interest expense | (16,909 | ) | (7,728 | ) | (38,862 | ) | (13,998 | ) | |||||||
Equity in net income (loss) of unconsolidated equity investments | (168 | ) | 123 | (2,923 | ) | 122 | |||||||||
Gain on dissolution of previously held U.S. unconsolidated equity investment interests | 7,229 | — | 7,229 | — | |||||||||||
Loss on extinguishment of debt | (1,356 | ) | — | (7,113 | ) | — | |||||||||
Income (loss) from continuing operations before provision for taxes | 26,265 | (590 | ) | 21,275 | 548 | ||||||||||
Provision for taxes | (2,700 | ) | (17 | ) | (3,403 | ) | (1,131 | ) | |||||||
Income (loss) from continuing operations | 23,565 | (607 | ) | 17,872 | (583 | ) | |||||||||
Income from discontinued operations | 58 | 120 | 2,768 | 58 | |||||||||||
Gain on extinguishment of debt | — | — | 1,930 | — | |||||||||||
Income from discontinued operations | 58 | 120 | 4,698 | 58 | |||||||||||
Income (loss) before gains on disposals | 23,623 | (487 | ) | 22,570 | (525 | ) | |||||||||
Net gains on disposals | — | 201 | — | 201 | |||||||||||
Gain on sale of European unconsolidated equity investment interests held with a related party | 5,341 | — | 5,341 | — | |||||||||||
Net income (loss) | 28,964 | (286 | ) | 27,911 | (324 | ) | |||||||||
Net income (loss) attributable to noncontrolling interest | (51 | ) | 21 | 69 | 63 | ||||||||||
Net income (loss) attributable to Gramercy Property Trust | 28,913 | (265 | ) | 27,980 | (261 | ) | |||||||||
Preferred share dividends | (1,558 | ) | (1,558 | ) | (3,117 | ) | (3,117 | ) | |||||||
Net income (loss) available to common shareholders | $ | 27,355 | $ | (1,823 | ) | $ | 24,863 | $ | (3,378 | ) | |||||
Basic earnings per share: | |||||||||||||||
Net income (loss) from continuing operations, after preferred dividends | $ | 0.06 | $ | (0.01 | ) | $ | 0.05 | $ | (0.02 | ) | |||||
Net income from discontinued operations | — | — | 0.01 | — | |||||||||||
Net income (loss) available to common shareholders | $ | 0.06 | $ | (0.01 | ) | $ | 0.06 | $ | (0.02 | ) | |||||
Diluted earnings per share: | |||||||||||||||
Net income (loss) from continuing operations, after preferred dividends | $ | 0.06 | $ | (0.01 | ) | $ | 0.05 | $ | (0.02 | ) | |||||
Net income from discontinued operations | — | — | 0.01 | — | |||||||||||
Net income (loss) available to common shareholders | $ | 0.06 | $ | (0.01 | ) | $ | 0.06 | $ | (0.02 | ) | |||||
Basic weighted average common shares outstanding | 422,330,927 | 177,393,521 | 421,994,655 | 163,332,554 | |||||||||||
Diluted weighted average common shares and common share equivalents outstanding | 427,542,605 | 177,393,521 | 426,265,771 | 163,332,554 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | 28,964 | $ | (286 | ) | $ | 27,911 | $ | (324 | ) | |||||
Other comprehensive income (loss): | |||||||||||||||
Unrealized gain on debt securities and derivative instruments: | |||||||||||||||
Unrealized gain on available for sale debt securities | 33 | 11 | 967 | 5,761 | |||||||||||
Unrealized gain (loss) on derivative instruments | (11,460 | ) | 1,468 | (33,649 | ) | (664 | ) | ||||||||
Reclassification of accumulated foreign currency translation adjustments due to disposal | (3,737 | ) | — | (3,737 | ) | — | |||||||||
Foreign currency translation adjustments | (8,686 | ) | 269 | (2,567 | ) | 51 | |||||||||
Reclassification of unrealized loss on terminated derivative instruments into earnings | 271 | — | 631 | — | |||||||||||
Other comprehensive income (loss) | (23,579 | ) | 1,748 | (38,355 | ) | 5,148 | |||||||||
Comprehensive income (loss) | 5,385 | 1,462 | (10,444 | ) | 4,824 | ||||||||||
Net (income) loss attributable to noncontrolling interest | (51 | ) | 21 | 69 | 63 | ||||||||||
Other comprehensive (income) loss attributable to noncontrolling interest | (67 | ) | 15 | (115 | ) | 53 | |||||||||
Comprehensive income (loss) attributable to Gramercy Property Trust | $ | 5,267 | $ | 1,498 | $ | (10,490 | ) | $ | 4,940 |
Common Shares | Preferred Shares | Additional Paid-In-Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings / (Accumulated Deficit) | Total Gramercy Property Trust | Noncontrolling interest | ||||||||||||||||||||||||||||
Shares | Par Value | Total | ||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | 420,523,153 | $ | 4,205 | $ | 84,394 | $ | 3,879,932 | $ | (5,751 | ) | $ | (1,051,454 | ) | $ | 2,911,326 | $ | (249 | ) | $ | 2,911,077 | ||||||||||||||
Net income (loss) | — | — | — | — | — | 27,980 | 27,980 | (139 | ) | 27,841 | ||||||||||||||||||||||||
Change in net unrealized loss on derivative instruments | — | — | — | — | (33,649 | ) | — | (33,649 | ) | — | (33,649 | ) | ||||||||||||||||||||||
Change in net unrealized gain on debt securities | — | — | — | — | 967 | — | 967 | — | 967 | |||||||||||||||||||||||||
Reclassification of unrealized gain of terminated derivative instruments into earnings | — | — | — | — | 631 | — | 631 | — | 631 | |||||||||||||||||||||||||
Share based compensation - fair value | 860,103 | 9 | — | 2,780 | — | — | 2,789 | — | 2,789 | |||||||||||||||||||||||||
Proceeds from share options exercised | 47,844 | — | 167 | 167 | 167 | |||||||||||||||||||||||||||||
Conversion of OP Units to common shares | 265,672 | 3 | — | 2,201 | — | — | 2,204 | — | 2,204 | |||||||||||||||||||||||||
Reallocation of noncontrolling interest in the operating partnership | — | — | — | (2,159 | ) | — | — | (2,159 | ) | — | (2,159 | ) | ||||||||||||||||||||||
Reclassification of accumulated foreign currency translation adjustments due to disposal | — | — | — | — | (3,737 | ) | — | (3,737 | ) | — | (3,737 | ) | ||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | (2,567 | ) | — | (2,567 | ) | (6 | ) | (2,573 | ) | |||||||||||||||||||||
Dividends on preferred shares | — | — | — | — | — | (3,117 | ) | (3,117 | ) | — | (3,117 | ) | ||||||||||||||||||||||
Dividends on common shares | — | — | — | — | — | (92,864 | ) | (92,864 | ) | — | (92,864 | ) | ||||||||||||||||||||||
Balance at June 30, 2016 | 421,696,772 | $ | 4,217 | $ | 84,394 | $ | 3,882,921 | $ | (44,106 | ) | $ | (1,119,455 | ) | $ | 2,807,971 | $ | (394 | ) | $ | 2,807,577 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Operating Activities: | |||||||
Net income (loss) | $ | 27,911 | $ | (324 | ) | ||
Adjustments to net cash provided by operating activities: | |||||||
Depreciation and amortization | 118,786 | 43,414 | |||||
Amortization of acquired leases to rental revenue and expense | (5,773 | ) | (6,067 | ) | |||
Amortization of deferred costs | 679 | 1,352 | |||||
Amortization of discounts and other fees | (2,102 | ) | (1,136 | ) | |||
Amortization of lease inducement costs | 173 | 96 | |||||
Straight-line rent adjustment | (12,716 | ) | (5,484 | ) | |||
Net gain on sale of properties and lease terminations | — | (201 | ) | ||||
Distributions received from unconsolidated equity investments | 13,775 | 206 | |||||
Equity in net income (loss) of unconsolidated equity investments | 2,923 | (122 | ) | ||||
Gain from dissolution of previously held unconsolidated equity investment interests | (7,229 | ) | — | ||||
Gain from sale of unconsolidated equity investment interests held with a related party | (5,341 | ) | — | ||||
Loss on extinguishment of debt | 5,183 | — | |||||
Amortization of share-based compensation | 2,422 | 1,683 | |||||
Other non-cash adjustments | 150 | — | |||||
Changes in operating assets and liabilities: | |||||||
Restricted cash | 4,509 | (963 | ) | ||||
Payment of capitalized leasing costs | (9,558 | ) | (838 | ) | |||
Tenant and other receivables | (11,842 | ) | (579 | ) | |||
Accrued interest | (8 | ) | (20 | ) | |||
Other assets | (7,480 | ) | 4,334 | ||||
Accounts payable, accrued expenses and other liabilities | (27,056 | ) | (1,920 | ) | |||
Deferred revenue | (9,311 | ) | 4,142 | ||||
Net cash provided by operating activities | 78,095 | 37,573 | |||||
Investing Activities: | |||||||
Capital expenditures | (9,474 | ) | (1,769 | ) | |||
Distributions received from unconsolidated equity investments | 47,408 | — | |||||
Proceeds from sale of unconsolidated equity interests held with a related party | 149,286 | — | |||||
Proceeds from sale of real estate | 528,870 | — | |||||
Return of restricted cash held in escrow for 1031 exchange | (42,908 | ) | 3,338 | ||||
Contributions to unconsolidated equity investments | (32,566 | ) | (2,192 | ) | |||
Acquisition of real estate | (304,267 | ) | (787,227 | ) | |||
Restricted cash for tenant improvements | (489 | ) | (6,270 | ) | |||
Proceeds from repayments of servicing advances receivable | 1,390 | — | |||||
Net cash provided by (used in) investing activities | 337,250 | (794,120 | ) | ||||
Financing Activities: | |||||||
Proceeds from unsecured term loans and revolving credit facility | 173,160 | 575,000 | |||||
Proceeds from senior unsecured notes | 50,000 | — | |||||
Repayment of unsecured term loans and revolving credit facility | (300,000 | ) | (225,000 | ) | |||
Proceeds from mortgage notes payables | 9,550 | — | |||||
Repayment of mortgage notes payable | (215,179 | ) | (2,471 | ) | |||
Offering costs | — | (12,124 | ) | ||||
Proceeds from sale of common stock | — | 289,910 | |||||
Payment of deferred financing costs | (1,734 | ) | (3,274 | ) | |||
Payment of debt extinguishment costs | (15,836 | ) | — | ||||
Preferred shares dividends paid | (3,117 | ) | (3,117 | ) | |||
Common shares dividends paid | (55,175 | ) | (18,845 | ) | |||
Proceeds from exercise of stock options and employee purchases under the employee share purchase plan | 167 | 32 | |||||
Contributions from noncontrolling interests in other entities | — | 169 | |||||
Distribution to noncontrolling interest holders | (177 | ) | (215 | ) | |||
Change in restricted cash from financing activities | (25 | ) | (25 | ) | |||
Net cash provided by (used in) financing activities | (358,366 | ) | 600,040 | ||||
Net increase (decrease) in cash and cash equivalents | 56,979 | (156,507 | ) | ||||
Decrease in cash and cash equivalents related to foreign currency translation | 131 | 33 | |||||
Cash and cash equivalents at beginning of period | 128,031 | 200,069 | |||||
Cash and cash equivalents at end of period | $ | 185,141 | $ | 43,595 |
Property Type | Number of Properties (1) | Rentable Square Feet | Occupancy | |||||
Industrial | 172 | 42,216,785 | 98.9 | % | ||||
Office | 108 | 9,539,561 | 98.2 | % | ||||
Specialty retail | 9 | 1,187,258 | 100.0 | % | ||||
Total | 289 | 52,943,604 | 98.8 | % |
(1) | Property counts have been adjusted to reflect number of properties instead of number of buildings. Adjustments are reflected throughout the financial statements. |
June 30, 2016 | December 31, 2015 | ||||||
Intangible assets: | |||||||
In-place leases, net of accumulated amortization of $100,377 and $49,125 | $ | 564,060 | $ | 644,540 | |||
Above-market leases, net of accumulated amortization of $12,001 and $5,051 | 72,596 | 94,202 | |||||
Below-market ground rent, net of accumulated amortization of $210 and $147 | 5,173 | 5,236 | |||||
Amounts related to assets held for sale, net of accumulated amortization of $0 | — | (61,804 | ) | ||||
Total intangible assets | $ | 641,829 | $ | 682,174 | |||
Intangible liabilities: | |||||||
Below-market leases, net of accumulated amortization of $28,590 and $16,934 | $ | 237,584 | $ | 255,452 | |||
Above-market ground rent, net of accumulated amortization of $195 and $149 | 3,475 | 3,522 | |||||
Amounts related to liabilities of assets held for sale, net of accumulated amortization of $0 | — | (16,518 | ) | ||||
Total intangible liabilities | $ | 241,059 | $ | 242,456 |
Weighted-Average Amortization Period | July 1 to December 31, 2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||
In-place leases | 9.8 | $ | 54,962 | $ | 90,370 | $ | 77,469 | $ | 63,672 | $ | 51,078 | ||||||||||
Total to be included in depreciation and amortization expense | $ | 54,962 | $ | 90,370 | $ | 77,469 | $ | 63,672 | $ | 51,078 | |||||||||||
Above-market lease assets | 7.9 | $ | 7,406 | $ | 12,991 | $ | 11,487 | $ | 9,873 | $ | 7,390 | ||||||||||
Below-market lease liabilities | 19.8 | (12,612 | ) | (13,243 | ) | (12,920 | ) | (12,697 | ) | (12,431 | ) | ||||||||||
Total to be included in rental revenue | $ | (5,206 | ) | $ | (252 | ) | $ | (1,433 | ) | $ | (2,824 | ) | $ | (5,041 | ) | ||||||
Below-market ground rent | 41.8 | $ | 64 | $ | 127 | $ | 127 | $ | 127 | $ | 127 | ||||||||||
Above-market ground rent | 37.0 | (47 | ) | (94 | ) | (94 | ) | (94 | ) | (94 | ) | ||||||||||
Total to be included in property operating expense | $ | 17 | $ | 33 | $ | 33 | $ | 33 | $ | 33 |
Company carrying value-assets | Company carrying value-liabilities | Face value of assets held by the VIEs | Face value of liabilities issued by the VIEs | ||||||||||||
Assets | |||||||||||||||
Consolidated VIEs | |||||||||||||||
Operating Partnership | $ | 5,410,227 | $ | 2,592,091 | $ | 5,410,227 | $ | 2,592,091 | |||||||
Proportion Foods | $ | 10,993 | $ | 2,613 | $ | 10,993 | $ | 11,539 | |||||||
Gramercy Europe Asset Management (European Fund Manager) | $ | 491 | $ | 1,279 | $ | 491 | $ | 1,279 | |||||||
Unconsolidated VIEs | |||||||||||||||
Gramercy Europe Asset Management (European Fund Carry Co.) | $ | — | $ | — | $ | 11 | $ | 30 | |||||||
Retained CDO Bonds | $ | 9,322 | $ | — | $ | 1,094,732 | $ | 1,152,434 |
Company carrying value-assets | Company carrying value-liabilities | Face value of assets held by the VIEs | Face value of liabilities issued by the VIEs | ||||||||||||
Assets | |||||||||||||||
Consolidated VIEs | |||||||||||||||
Proportion Foods | $ | 7,949 | $ | 16 | $ | 7,949 | $ | 8,183 | |||||||
Gramercy Europe Asset Management (European Fund Manager) | $ | 334 | $ | 832 | $ | 334 | $ | 832 | |||||||
Unconsolidated VIEs | |||||||||||||||
Gramercy Europe Asset Management (European Fund Carry Co.) | $ | — | $ | — | $ | 11 | $ | 16 | |||||||
Retained CDO Bonds | $ | 7,471 | $ | — | $ | 1,382,373 | $ | 1,282,583 |
Description | Number of Securities | Face Value | Amortized Cost | Gross Unrealized Gain | Other-than-temporary impairment | Fair Value | Weighted Average Expected Life | ||||||||||||||||||
Available for Sale, Non- investment Grade: | |||||||||||||||||||||||||
Retained CDO Bonds | 9 | $ | 379,515 | $ | 7,345 | $ | 1,977 | $ | — | $ | 9,322 | 2.2 | |||||||||||||
Total | 9 | $ | 379,515 | $ | 7,345 | $ | 1,977 | $ | — | $ | 9,322 | 2.2 |
2016 | 2015 | ||||||
Balance as of January 1, 2016 and January 1, 2015, respectively, of credit losses on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income | $ | 3,196 | $ | 6,818 | |||
Additions to credit losses: | — | — | |||||
On Retained CDO Bonds for which an OTTI was not previously recognized | — | — | |||||
On Retained CDO Bonds for which an OTTI was previously recognized and a portion of an OTTI was recognized in other comprehensive income | — | — | |||||
On Retained CDO Bonds for which an OTTI was previously recognized without any portion of OTTI recognized in other comprehensive income | — | — | |||||
Reduction for credit losses: | — | — | |||||
On Retained CDO Bonds for which no OTTI was recognized in other comprehensive income at current measurement date | — | — | |||||
On Retained CDO Bonds sold during the period | — | — | |||||
On Retained CDO Bonds charged off during the period | — | — | |||||
For increases in cash flows expected to be collected that are recognized over the remaining life of the Retained CDO Bonds | (2,121 | ) | (3,622 | ) | |||
Balance as of June 30, 2016 and December 31, 2015, respectively, of credit losses (gains) on Retained CDO Bonds for which a portion of an OTTI was recognized in other comprehensive income | $ | 1,075 | $ | 3,196 |
Assets held for sale | June 30, 2016 | December 31, 2015 | |||||
Real estate investments | $ | 9,752 | $ | 348,582 | |||
Acquired lease assets | — | 61,804 | |||||
Other assets | 322 | 10,099 | |||||
Total assets | 10,074 | 420,485 | |||||
Liabilities related to assets held for sale | |||||||
Mortgage notes payable, net | — | 260,704 | |||||
Below-market lease liabilities | — | 16,518 | |||||
Other liabilities | 371 | 14,142 | |||||
Total liabilities | 371 | 291,364 | |||||
Net assets held for sale | $ | 9,703 | $ | 129,121 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Operating Results: | |||||||||||||||
Revenues | $ | 140 | $ | 71 | $ | 5,997 | $ | (29 | ) | ||||||
Operating expenses | (56 | ) | 38 | (2,236 | ) | 248 | |||||||||
General and administrative expense | (26 | ) | 11 | (38 | ) | (161 | ) | ||||||||
Interest expense | — | — | (955 | ) | — | ||||||||||
Gain on extinguishment of debt | — | — | 1,930 | — | |||||||||||
Net income from discontinued operations | $ | 58 | $ | 120 | $ | 4,698 | $ | 58 |
Six Months Ended June 30, | ||||||||
2016 | 2015 | |||||||
Significant operating noncash items | $ | (9,452 | ) | $ | — | |||
Increase in cash and cash equivalents related to foreign currency translation | 1,045 | — | ||||||
Total | $ | (8,407 | ) | $ | — |
Property Type(1) | Number of Properties | Square Feet | Purchase Price | ||||||
Industrial(2) | 28 | 8,359,186 | $ | 566,859 | |||||
Office(2) | 4 | 310,072 | 58,050 | ||||||
Total | 32 | 8,669,258 | $ | 624,909 |
(1) | Includes seven properties distributed to the Company from the Duke JV, of which five were industrial properties that comprise 3,909,945 square feet and two were office properties that comprise 279,685 square feet. The Company previously owned an 80.0% interest in these properties based on its interest in the joint venture. The fair value of these properties at 100.0% was $276,100, which is included above in the purchase price amounts. Two of the properties distributed to the Company were encumbered by mortgages, of which the unpaid aggregate principal value was $12,931 at the time of distribution. The Company paid off these mortgages on June 30, 2016. |
(2) | The Company assumed mortgages on 11 of its property acquisitions in 2016, not including the two mortgages assumed and subsequently paid off on properties distributed to the Company from the Duke JV during the period, noted above. The unpaid principal value of the mortgages assumed at acquisition was $45,958. Refer to Note 6 for more information on the Company’s debt obligations related to acquisitions. |
Property Type(1) | Number of Properties | Square Feet | Purchase Price | ||||||
Industrial(2) | 89 | 23,972,916 | $ | 1,561,828 | |||||
Office(2) | 45 | 8,496,686 | 1,864,235 | ||||||
Specialty retail | 10 | 1,330,544 | 300,500 | ||||||
Total | 144 | 33,800,146 | $ | 3,726,563 |
(1) | Includes 95 properties acquired as part of the Merger, of which 57 were industrial properties that comprise 17,355,358 square feet and 38 were office properties that comprise 7,205,381 square feet. |
(2) | The Company assumed mortgages on 13 of its property acquisitions in 2015. The unpaid principal value of the mortgages assumed at acquisition was $153,877. Additionally, the Company assumed 30 mortgages in connection with 29 properties acquired as part of the Merger in 2015. The unpaid principal value of the mortgages assumed with the Merger was $464,292, of which $254,291 was classified as held for sale upon closing of the Merger. Refer to Note 6 for more information on the Company’s debt obligations related to acquisitions. |
Preliminary Allocations recorded | ||||||||||||||
Period of Acquisition | Number of Acquisitions | Real Estate Assets | Intangible Assets | Intangible Liabilities | ||||||||||
Six Months Ended June 30, 2016 | 23 | $ | 410,164 | $ | 56,754 | $ | 9,797 | |||||||
Year Ended December 31, 2015(1) | 1 | $ | 7,947 | $ | — | $ | — |
(1) | Allocations exclude the properties acquired as part of the Merger, which are separately disclosed below in the section, “Merger with Chambers.” Additionally, allocations represent the real estate assets of Proportion Foods, a consolidated VIE. Refer to Note 2 for more information on Proportion Foods. |
Preliminary Allocations recorded | Finalized Allocations recorded | |||||||||||||||||||||||||||||||||
Period Finalized | No. of Acquisitions | Real Estate Assets | Intangible Assets | Intangible Liabilities | Real Estate Assets | Intangible Assets | Intangible Liabilities | Increase to Rental Revenue | Increase to Depreciation and Amortization Expense | |||||||||||||||||||||||||
Six Months Ended June 30, 2016 | 20 | $ | 432,401 | $ | 2,084 | $ | 184 | $ | 410,859 | $ | 26,589 | $ | 3,146 | $ | 18 | $ | (13 | ) | ||||||||||||||||
Year Ended December 31, 2015(1) | 136 | $ | 1,373,360 | $ | 320,066 | $ | 81,961 | $ | 1,535,763 | $ | 302,083 | $ | 226,381 | $ | 2,307 | $ | (205 | ) |
(1) | Allocations for the year ended December 31, 2015 include the 67 properties acquired as part of the Bank of America Portfolio. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Pro forma revenues(1) | $ | 145,780 | $ | 126,643 | $ | 267,367 | $ | 260,674 | |||||||
Pro forma net income available to common shareholders(1), (2) | $ | 20,591 | $ | 16,889 | $ | 19,354 | $ | 42,753 | |||||||
Pro forma income per common share-basic | $ | 0.05 | $ | 0.09 | $ | 0.05 | $ | 0.26 | |||||||
Pro forma income per common share-diluted | $ | 0.05 | $ | 0.09 | $ | 0.05 | $ | 0.25 | |||||||
Pro forma common shares-basic | 422,330,927 | 178,239,319 | 421,994,655 | 164,166,566 | |||||||||||
Pro forma common share-diluted | 427,542,605 | 182,800,663 | 426,265,771 | 169,122,354 |
(1) | The pro forma results for all periods presented include adjustments to reflect the Company’s continuing 5.1% interest in the Goodman Europe JV as well as its 100.0% interest in the seven properties it received through distribution from the Duke JV on June 30, 2016. |
(2) | Net income for each period has been adjusted for acquisition costs related to the property acquisitions during the period. |
Assets | |||
Investments: | |||
Land | $ | 261,514 | |
Buildings and improvements | 1,653,634 | ||
Net investments | 1,915,148 | ||
Cash and cash equivalents | 24,687 | ||
Restricted cash | 8,990 | ||
Unconsolidated equity investments | 561,752 | ||
Tenant and other receivables, net | 11,166 | ||
Acquired lease assets | 387,988 | ||
Deferred costs and other assets | 5,002 | ||
Assets held for sale | 412,565 | ||
Total assets | $ | 3,327,298 | |
Liabilities | |||
Mortgage notes payable | $ | 216,754 | |
Revolving credit facilities and term loans | 860,000 | ||
Below-market lease liabilities | 40,593 | ||
Accounts payable, accrued expenses, and other liabilities | 87,434 | ||
Liabilities related to assets held for sale | 293,276 | ||
Total liabilities | $ | 1,498,057 | |
Estimated fair value of net assets acquired | $ | 1,829,241 |
As of June 30, 2016 | As of June 30, 2016 | As of December 31, 2015 | ||||||||||||||||||||
Investment | Ownership % | Voting Interest % | Partner | Investment in Unconsolidated Equity Investment(1) | No. of Properties | Investment in Unconsolidated Equity Investment(1) | No. of Properties | |||||||||||||||
Gramercy European Property Fund (2), (3) | 14.2 | % | 14.2 | % | Various | $ | 52,056 | 21 | $ | 23,381 | 12 | |||||||||||
Philips JV | 25.0 | % | 25.0 | % | Various | — | 1 | — | 1 | |||||||||||||
Duke JV | 80.0 | % | 50.0 | % | Duke Realty | 41,133 | 1 | 352,932 | 13 | |||||||||||||
Goodman Europe JV (3) | 5.1 | % | 5.1 | % | Gramercy European Property Fund | 8,918 | 9 | 158,863 | 9 | |||||||||||||
Goodman UK JV | 80.0 | % | 50.0 | % | Goodman Group | 35,361 | 3 | 36,698 | 3 | |||||||||||||
CBRE Strategic Partners Asia | 5.07 | % | 5.07 | % | Various | 5,162 | 2 | 5,508 | 2 | |||||||||||||
Morristown JV | 50.0 | % | 50.0 | % | 21 South Street | 2,622 | 1 | 2,618 | 1 | |||||||||||||
Total | $ | 145,252 | 38 | $ | 580,000 | 41 |
(1) | The amounts presented include basis differences of $3,707, $2,562 and $5,684, net of accumulated amortization, for the Duke JV, Goodman Europe JV, and Goodman UK JV, respectively, as of June 30, 2016. The amounts presented include basis differences of $136,198, $37,371, and $6,578, net of accumulated amortization, for the Duke JV, Goodman Europe JV, and Goodman UK JV, respectively, as of December 31, 2015. |
(2) | Includes European Fund Carry Co., which has a carrying value of $12 and $0 for the Company’s 25.0% interest as of June 30, 2016 and December 31, 2015, respectively. |
(3) | As of June 30, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest of Goodman Europe JV through its 14.2% interest in the Gramercy European Property Fund. |
Unconsolidated Equity Investments | |||
Balance as of December 31, 2015 | $ | 580,000 | |
Contributions to unconsolidated equity investments | 30,247 | ||
Equity in net loss of unconsolidated equity investments, including adjustments for basis differences | (2,923 | ) | |
Other comprehensive loss of unconsolidated equity investments | (689 | ) | |
Distributions from unconsolidated equity investments(1) | (324,197 | ) | |
Purchase price allocation adjustments | 2,865 | ||
Gains on sale and dissolution of unconsolidated equity investment interests | 12,570 | ||
Sale of unconsolidated equity investments | (148,884 | ) | |
Reclassification of accumulated foreign currency translation adjustments due to disposal | $ | (3,737 | ) |
Balance as of June 30, 2016 | $ | 145,252 |
(1) | Includes the fair value of the seven properties of $276,100 distributed by the Duke JV to the Company. |
As of June 30, 2016 | |||||||||||||||||||||||||||||||
Gramercy European Property Fund(1) | |||||||||||||||||||||||||||||||
Goodman Europe JV | Gramercy European Property Fund, excluding legacy Goodman Europe JV | Total | Goodman UK JV | Duke JV | CBRE Strategic Partners Asia | Other(2) | Total | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Real estate assets, net(3) | $ | 306,922 | $ | 321,234 | $ | 628,156 | $ | 37,805 | $ | 47,386 | $ | 110,927 | $ | 50,136 | $ | 874,410 | |||||||||||||||
Other assets | 34,900 | 74,255 | 109,155 | 6,211 | 7,907 | 8,901 | 3,430 | 135,604 | |||||||||||||||||||||||
Total assets | $ | 341,822 | $ | 395,489 | $ | 737,311 | $ | 44,016 | $ | 55,293 | $ | 119,828 | $ | 53,566 | $ | 1,010,014 | |||||||||||||||
Liabilities and members’ equity: | |||||||||||||||||||||||||||||||
Mortgages payable | $ | 135,177 | $ | 188,469 | $ | 323,646 | $ | — | $ | — | $ | — | $ | 39,688 | $ | 363,334 | |||||||||||||||
Other liabilities | 7,026 | 20,846 | 27,872 | 1,235 | 5,026 | 14,149 | 4,186 | 52,468 | |||||||||||||||||||||||
Total liabilities | 142,203 | 209,315 | 351,518 | 1,235 | 5,026 | 14,149 | 43,874 | 415,802 | |||||||||||||||||||||||
Gramercy Property Trust equity | 32,524 | 28,438 | 60,962 | 35,361 | 41,133 | 5,162 | 2,634 | 145,252 | |||||||||||||||||||||||
Other members’ equity | 167,095 | 157,736 | 324,831 | 7,420 | 9,134 | 100,517 | 7,058 | 448,960 | |||||||||||||||||||||||
Liabilities and members’ equity | $ | 341,822 | $ | 395,489 | $ | 737,311 | $ | 44,016 | $ | 55,293 | $ | 119,828 | $ | 53,566 | $ | 1,010,014 |
(1) | As of June 30, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. |
(2) | Includes the Philips JV, the Morristown JV, and European Fund Carry Co. |
(3) | Includes basis adjustments that were recorded by the Company to adjust the unconsolidated equity investments to fair value upon closing of the Merger. |
As of December 31, 2015 | |||||||||||||||||||||||||||
Goodman Europe JV | Gramercy European Property Fund | Goodman UK JV | Duke JV | CBRE Strategic Partners Asia | Other(1) | Total | |||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||
Real estate assets, net(2) | $ | 276,925 | $ | 236,312 | $ | 42,584 | $ | 443,313 | $ | 109,554 | $ | 50,698 | $ | 1,159,386 | |||||||||||||
Other assets | 42,139 | 39,983 | 3,427 | 32,739 | 9,337 | 15,954 | 143,579 | ||||||||||||||||||||
Total assets | $ | 319,064 | $ | 276,295 | $ | 46,011 | $ | 476,052 | $ | 118,891 | $ | 66,652 | $ | 1,302,965 | |||||||||||||
Liabilities and members’ equity: | |||||||||||||||||||||||||||
Mortgages payable | $ | 121,350 | $ | 143,616 | $ | — | $ | 56,105 | $ | — | $ | 40,424 | $ | 361,495 | |||||||||||||
Other liabilities | 8,622 | 14,581 | 1,783 | 6,035 | 13,948 | 16,540 | 61,509 | ||||||||||||||||||||
Total liabilities | 129,972 | 158,197 | 1,783 | 62,140 | 13,948 | 56,964 | 423,004 | ||||||||||||||||||||
Gramercy Property Trust equity | 158,863 | 23,385 | 36,698 | 352,932 | 5,508 | 2,614 | 580,000 | ||||||||||||||||||||
Other members’ equity | 30,229 | 94,713 | 7,530 | 60,980 | 99,435 | 7,074 | 299,961 | ||||||||||||||||||||
Liabilities and members’ equity | $ | 319,064 | $ | 276,295 | $ | 46,011 | $ | 476,052 | $ | 118,891 | $ | 66,652 | $ | 1,302,965 |
(1) | Includes the Philips JV, the Morristown JV, and European Fund Carry Co. |
(2) | Includes basis adjustments that were recorded by the Company to adjust the unconsolidated equity investments to fair value upon closing of the Merger. |
Outstanding Balance(2) | ||||||||||||||||
Property | Unconsolidated Equity Investment | Economic Ownership % | Interest Rate (1) | Maturity Date | June 30, 2016 | December 31, 2015 | ||||||||||
Graben, Germany(3) | Goodman Europe JV | 18.6% | (4) | 2.39% | 7/27/2017 | $ | 35,967 | $ | 33,781 | |||||||
Koblenz Germany | Goodman Europe JV | 18.6% | (4) | 2.27% | 12/12/2017 | 36,968 | 34,486 | |||||||||
Durrholz, Germany | Gramercy European Property Fund | 14.2% | 1.52% | 3/31/2020 | 13,120 | 12,937 | ||||||||||
Venray, Germany | Gramercy European Property Fund | 14.2% | 3.32% | 12/2/2020 | 13,806 | 13,578 | ||||||||||
Bremen, Germany | Goodman Europe JV | 18.6% | (4) | 3.01% | 11/25/2020 | 14,973 | 12,817 | |||||||||
Bodenheim, Germany | Goodman Europe JV | 18.6% | (4) | 3.01% | 11/25/2020 | 14,366 | 12,296 | |||||||||
Lille, France | Goodman Europe JV | 18.6% | (4) | 3.13% | 12/17/2020 | 32,898 | 27,970 | |||||||||
Carlisle, United Kingdom | Gramercy European Property Fund | 14.2% | 3.32% | 2/19/2021 | 11,264 | — | ||||||||||
Breda, Netherlands | Gramercy European Property Fund | 14.2% | 1.74% | 12/30/2022 | 10,585 | 7,796 | ||||||||||
Fredersdorf, Germany | Gramercy European Property Fund | 14.2% | 2.03% | 12/30/2022 | 11,966 | 11,783 | ||||||||||
Frechen, Germany | Gramercy European Property Fund | 14.2% | 1.44% | 12/30/2022 | 6,437 | — | ||||||||||
Friedrichspark, Germany | Gramercy European Property Fund | 14.2% | 2.03% | 12/30/2022 | 9,250 | 9,109 | ||||||||||
Juechen, Germany | Gramercy European Property Fund | 14.2% | 1.84% | 12/30/2022 | 20,057 | 19,750 | ||||||||||
Kerkrade, Netherlands | Gramercy European Property Fund | 14.2% | 2.03% | 12/30/2022 | 10,237 | 10,081 | ||||||||||
Oud Beijerland, Netherlands | Gramercy European Property Fund | 18.6% | 2.04% | 12/30/2022 | 8,594 | 8,463 | ||||||||||
Piaseczno, Poland | Gramercy European Property Fund | 14.2% | 1.93% | 12/30/2022 | 8,654 | 8,522 | ||||||||||
Rotterdam, Netherlands | Gramercy European Property Fund | 14.2% | 1.84% | 12/30/2022 | 8,108 | — | ||||||||||
Strykow, Poland | Gramercy European Property Fund | 14.2% | 1.93% | 12/30/2022 | 20,375 | 20,063 | ||||||||||
Uden, Netherlands | Gramercy European Property Fund | 14.2% | 1.93% | 12/30/2022 | 9,475 | 9,331 | ||||||||||
Zaandam, Netherlands | Gramercy European Property Fund | 14.2% | 2.03% | 12/30/2022 | 12,392 | 12,203 | ||||||||||
Netherlands portfolio(5) | Gramercy European Property Fund | 14.2% | 3.00% | 6/28/2023 | 14,153 | — | ||||||||||
Somerset, NJ | Philips JV | 25.0% | 6.90% | 9/11/2035 | 40,364 | 40,424 | ||||||||||
Lake Forest, IL | Duke JV | 80.0% | N/A | N/A | — | 8,823 | ||||||||||
Tampa, FL | Duke JV | 80.0% | N/A | N/A | — | 4,231 | ||||||||||
Fort Lauderdale, FL (6) | Duke JV | 80.0% | N/A | N/A | — | 43,051 | ||||||||||
Total | $ | 364,009 | $ | 361,495 |
(1) | Represents the current effective rate as of June 30, 2016, including the swapped interest rate for loans that have interest rate swaps. The current interest rate is not adjusted to include the amortization of fair market value premiums or discounts. |
(2) | Mortgage loans amounts are presented at 100.0% of the amount in the unconsolidated equity investment. |
(3) | Represents two properties under this mortgage loan. |
(4) | Represents the Company’s economic ownership in the Goodman Europe JV, which includes both its 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. |
(5) | Represents five properties under this mortgage loan. |
(6) | Represents four properties under this mortgage loan. |
For the Three Months Ended June 30, 2016 | For the Three Months Ended June 30, 2015 | ||||||||||||||||||||||||||||||||||
Gramercy European Property Fund(1) | |||||||||||||||||||||||||||||||||||
Goodman Europe JV | Gramercy European Property Fund, excluding legacy Goodman Europe JV | Total | Goodman UK JV | Duke JV | CBRE Strategic Partners Asia | Other(2) | Total | Total(3) | |||||||||||||||||||||||||||
Revenues | $ | 6,073 | $ | 5,884 | $ | 11,957 | $ | 636 | $ | 8,860 | $ | 1,024 | $ | 1,083 | $ | 23,560 | $ | 1,316 | |||||||||||||||||
Operating expenses | 833 | 1,068 | 1,901 | 186 | 2,128 | 288 | 85 | 4,588 | — | ||||||||||||||||||||||||||
Acquisition expenses | 4,960 | 1,871 | 6,831 | — | — | — | 23 | 6,854 | — | ||||||||||||||||||||||||||
Interest expense | 944 | 967 | 1,911 | — | 167 | — | 704 | 2,782 | 573 | ||||||||||||||||||||||||||
Depreciation and amortization | 2,342 | 2,487 | 4,829 | 371 | 3,424 | — | 333 | 8,957 | 526 | ||||||||||||||||||||||||||
Total expenses | 9,079 | 6,393 | 15,472 | 557 | 5,719 | 288 | 1,145 | 23,181 | 1,099 | ||||||||||||||||||||||||||
Net income (loss) from operations | (3,006 | ) | (509 | ) | (3,515 | ) | 79 | 3,141 | 736 | (62 | ) | 379 | 217 | ||||||||||||||||||||||
Loss on derivatives | — | (1,489 | ) | (1,489 | ) | — | — | — | — | (1,489 | ) | — | |||||||||||||||||||||||
Provision for taxes | — | (276 | ) | (276 | ) | — | — | — | — | (276 | ) | — | |||||||||||||||||||||||
Net income (loss) | $ | (3,006 | ) | $ | (2,274 | ) | $ | (5,280 | ) | $ | 79 | $ | 3,141 | $ | 736 | $ | (62 | ) | $ | (1,386 | ) | $ | 217 | ||||||||||||
Company’s share in net income (loss) | $ | (2,405 | ) | $ | (438 | ) | $ | (2,843 | ) | $ | 63 | $ | 2,513 | $ | 36 | $ | 11 | $ | (220 | ) | $ | 123 | |||||||||||||
Basis adjustments | 931 | — | 931 | (7 | ) | (872 | ) | — | — | 52 | — | ||||||||||||||||||||||||
Company’s equity in net income (loss) within continuing operations | $ | (1,474 | ) | $ | (438 | ) | $ | (1,912 | ) | $ | 56 | $ | 1,641 | $ | 36 | $ | 11 | $ | (168 | ) | $ | 123 |
(1) | As of June 30, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the three months ended June 30, 2016, the Company recorded its equity in net income (loss) from the Goodman Europe JV and the Gramercy European Property Fund based upon its day-weighted equity interest in the entities throughout the three months, which was 80.0% for Goodman Europe JV and 19.3% for the Gramercy European Property Fund. |
(2) | Includes the Philips JV, the Morristown JV, and European Fund Carry Co. |
(3) | Represents the Gramercy European Property Fund and the Philips JV. |
For the Six Months Ended June 30, 2016 | For the Six Months Ended June 30, 2015 | ||||||||||||||||||||||||||||||||||
Gramercy European Property Fund(1) | |||||||||||||||||||||||||||||||||||
Goodman Europe JV | Gramercy European Property Fund, excluding legacy Goodman Europe JV | Total | Goodman UK JV | Duke JV | CBRE Strategic Partners Asia | Other(2) | Total | Total(3) | |||||||||||||||||||||||||||
Revenues | $ | 12,194 | $ | 10,941 | $ | 23,135 | $ | 4,920 | $ | 19,395 | $ | 242 | $ | 2,164 | $ | 49,856 | $ | 2,274 | |||||||||||||||||
Operating expenses | 1,696 | 1,569 | 3,265 | 473 | 5,118 | 867 | 213 | 9,936 | 528 | ||||||||||||||||||||||||||
Acquisition expenses | 4,960 | 2,537 | 7,497 | — | — | — | 27 | 7,524 | — | ||||||||||||||||||||||||||
Interest expense | 1,866 | 1,894 | 3,760 | — | 602 | — | 1,432 | 5,794 | 1,094 | ||||||||||||||||||||||||||
Depreciation and amortization | 4,631 | 4,833 | 9,464 | 1,121 | 7,152 | — | 666 | 18,403 | 840 | ||||||||||||||||||||||||||
Total expenses | 13,153 | 10,833 | 23,986 | 1,594 | 12,872 | 867 | 2,338 | 41,657 | 2,462 | ||||||||||||||||||||||||||
Net income (loss) from operations | (959 | ) | 108 | (851 | ) | 3,326 | 6,523 | (625 | ) | (174 | ) | 8,199 | (188 | ) | |||||||||||||||||||||
Loss on derivatives | — | (5,303 | ) | (5,303 | ) | — | — | — | — | (5,303 | ) | — | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | (7,962 | ) | — | — | (7,962 | ) | — | ||||||||||||||||||||||||
Net gains on disposals | — | — | — | — | 38,535 | — | — | 38,535 | — | ||||||||||||||||||||||||||
Provision for taxes | — | (591 | ) | (591 | ) | — | — | — | — | (591 | ) | — | |||||||||||||||||||||||
Net income (loss) | $ | (959 | ) | $ | (5,786 | ) | $ | (6,745 | ) | $ | 3,326 | $ | 37,096 | $ | (625 | ) | $ | (174 | ) | $ | 32,878 | $ | (188 | ) | |||||||||||
Company’s share in net income (loss) | $ | (768 | ) | $ | (1,133 | ) | $ | (1,901 | ) | $ | 2,661 | $ | 29,675 | $ | (36 | ) | $ | 4 | $ | 30,403 | $ | 122 | |||||||||||||
Basis adjustments | 445 | — | 445 | (278 | ) | (33,493 | ) | — | — | (33,326 | ) | — | |||||||||||||||||||||||
Company’s equity in net income (loss) within continuing operations | $ | (323 | ) | $ | (1,133 | ) | $ | (1,456 | ) | $ | 2,383 | $ | (3,818 | ) | $ | (36 | ) | $ | 4 | $ | (2,923 | ) | $ | 122 |
(1) | As of June 30, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. For the six months ended June 30, 2016, the Company recorded its equity in net income (loss) from the Goodman Europe JV and the Gramercy European Property Fund based upon its day-weighted equity interest in the entities throughout the six months, which was 80.0% for Goodman Europe JV and 19.6% for the Gramercy European Property Fund. |
(2) | Includes Philips JV, Morristown JV, and European Fund Carry Co. |
(3) | Represents the Gramercy European Property Fund and the Philips JV. |
Property | Interest Rate(1) | Maturity Date | Outstanding Balance | |||||||||
June 30, 2016 | December 31, 2015 | |||||||||||
Wilson, NC | 5.33% | 10/1/2016 | $ | 8,487 | $ | 8,603 | ||||||
Charlotte, NC | 5.57% | 11/11/2016 | 13,025 | 13,025 | ||||||||
Coppell, TX(2) | 3.41% | 12/6/2016 | 10,228 | 10,391 | ||||||||
Buford, GA | 7.46% | 7/1/2017 | 15,733 | 15,947 | ||||||||
Woodcliff Lake, NJ | 5.97% | 9/15/2017 | 18,016 | 18,340 | ||||||||
Woodcliff Lake, NJ | 5.97% | 9/15/2017 | 18,017 | 18,341 | ||||||||
Cincinnati, KY(3) | 4.45% | 3/1/2018 | 6,704 | 6,777 | ||||||||
Dallas, TX(3) | 4.45% | 3/1/2018 | 9,648 | 9,754 | ||||||||
Jacksonville, FL(3) | 4.45% | 3/1/2018 | 6,930 | 7,006 | ||||||||
Minneapolis, MN(3) | 4.45% | 3/1/2018 | 6,069 | 6,136 | ||||||||
Phoenix, AZ(3) | 4.45% | 3/1/2018 | 4,167 | 4,213 | ||||||||
Ames, IA(2) | 5.53% | 5/1/2018 | 16,671 | 16,900 | ||||||||
Columbus, OH | 3.78% | 5/31/2018 | 20,176 | 20,644 | ||||||||
Greenfield, IN | 3.28% | 6/15/2018 | 6,081 | 6,150 | ||||||||
Greenwood, IN | 3.28% | 6/15/2018 | 7,524 | 7,610 | ||||||||
Philadelphia, PA | 4.28% | 1/1/2019 | 12,514 | 12,696 | ||||||||
Columbus, OH | 3.95% | 1/31/2019 | 6,001 | 6,094 | ||||||||
Bridgeview, IL | 7.40% | 5/1/2019 | 6,098 | — | ||||||||
Etobicoke, Canada | 3.58% | 5/5/2019 | 5,418 | — | ||||||||
Rexdale, Canada | 3.58% | 5/5/2019 | 2,978 | — | ||||||||
Spartanburg, SC | 5.42% | 6/1/2019 | 1,214 | 1,398 | ||||||||
Charleston, SC | 5.65% | 8/1/2019 | 1,239 | 1,486 | ||||||||
Charlotte, NC | 5.47% | 1/1/2020 | 2,542 | 2,859 | ||||||||
Lawrence, IN | 4.00% | 1/1/2020 | 21,066 | 21,371 | ||||||||
Aurora, CO | 5.46% | 7/1/2020 | 2,058 | 2,074 | ||||||||
Commerce, CA | 5.46% | 7/1/2020 | 8,071 | 8,134 | ||||||||
Dixon, IL | 5.46% | 7/1/2020 | 8,071 | 8,134 | ||||||||
El Segundo, CA | 5.46% | 7/1/2020 | 15,335 | 15,455 | ||||||||
Houston, TX | 5.46% | 7/1/2020 | 17,273 | 17,407 | ||||||||
Irving, TX | 5.46% | 7/1/2020 | 21,631 | 21,800 | ||||||||
Parsippany, NJ | 5.46% | 7/1/2020 | 14,811 | 14,926 | ||||||||
Plantation, FL | 5.46% | 7/1/2020 | 17,555 | 17,692 | ||||||||
Redondo Beach, CA | 5.46% | 7/1/2020 | 9,282 | 9,354 | ||||||||
Richardson, TX | 5.46% | 7/1/2020 | 3,229 | 3,254 | ||||||||
Richfield, OH | 5.46% | 7/1/2020 | 7,869 | 7,931 | ||||||||
Hawthorne, CA | 6.60% | 8/1/2020 | 17,894 | 18,108 | ||||||||
Charleston, SC | 5.20% | 10/1/2020 | 1,098 | 1,210 | ||||||||
Charleston, SC | 5.20% | 10/1/2020 | 1,098 | 1,210 | ||||||||
Charleston, SC | 5.20% | 10/1/2020 | 1,117 | 1,230 | ||||||||
Charlotte, NC | 5.27% | 10/1/2020 | 952 | 1,049 | ||||||||
Des Plaines, IL | 5.25% | 10/31/2020 | 2,501 | 2,537 | ||||||||
Waco, TX | 4.55% | 12/19/2020 | 15,336 | 15,485 | ||||||||
Deerfield, IL | 4.75% | 1/1/2021 | 10,976 | 11,145 | ||||||||
Winston-Salem, NC | 5.53% | 6/1/2021 | 4,604 | 4,998 | ||||||||
Winston-Salem, NC | 5.50% | 7/1/2021 | 1,519 | 1,647 | ||||||||
Baltimore, MD | 4.54% | 10/6/2022 | 6,158 | — |
Property | Interest Rate(1) | Maturity Date | Outstanding Balance | |||||||||
June 30, 2016 | December 31, 2015 | |||||||||||
Elizabeth, NJ | 4.54% | 10/6/2022 | 2,585 | — | ||||||||
Monroe Twp, NJ | 4.54% | 10/6/2022 | $ | 2,515 | $ | — | ||||||
Santa Ana, CA | 4.54% | 10/6/2022 | 5,876 | — | ||||||||
Tracy, CA | 4.54% | 10/6/2022 | 6,369 | — | ||||||||
Auburndale, FL | 4.82% | 7/6/2023 | 1,763 | — | ||||||||
Salem, VA | 4.82% | 7/6/2023 | 1,711 | — | ||||||||
Santa Fe Springs, CA | 4.82% | 7/6/2023 | 4,117 | — | ||||||||
Yuma, AZ | 5.15% | 12/6/2023 | 12,154 | 12,247 | ||||||||
Allentown, PA | 5.07% | 1/6/2024 | 23,263 | 23,443 | ||||||||
Spartanburg, SC | 6.33% | 2/1/2024 | 6,705 | 7,040 | ||||||||
Charleston, SC | 5.80% | 2/1/2025 | 6,972 | 7,277 | ||||||||
Hackettstown, NJ | 5.15% | 3/6/2026 | 9,550 | — | ||||||||
Hutchins, TX | 6.95% | 6/1/2029 | 23,329 | 23,870 | ||||||||
Jersey City, NJ(4), (5) | N/A | N/A | — | 112,000 | ||||||||
Jersey City, NJ(5) | N/A | N/A | — | 101,726 | ||||||||
Blue Ash, OH5) | N/A | N/A | — | 14,896 | ||||||||
Blue Ash, OH(5) | N/A | N/A | — | 13,139 | ||||||||
Blue Ash, OH(5) | N/A | N/A | — | 12,485 | ||||||||
Bloomington, MN | N/A | N/A | — | 19,824 | ||||||||
Bloomington, MN | N/A | N/A | — | 21,825 | ||||||||
Total mortgage notes payable | 521,893 | 770,293 | ||||||||||
Plus net deferred financing costs and net debt premium(6) | 11,088 | 20,633 | ||||||||||
Total mortgage notes payable, net | 532,981 | 790,926 | ||||||||||
Total mortgage notes payable, net on assets held for sale | — | (260,704 | ) | |||||||||
Total mortgage notes payable, net | $ | 532,981 | $ | 530,222 |
(1) | Represents the current interest rate as of June 30, 2016, including the swapped interest rate for loans that have interest rate swaps. The current interest rate is not adjusted to include the amortization of fair market value premiums or discounts. |
(2) | As of June 30, 2016, due to non-renewal of the tenant leases at these properties, the lenders have imposed a “cash trap” on the properties. As a result, cash flows from the properties will automatically be directed to the lenders to satisfy required debt service payments, fund reserves required by the mortgages, and fund additional cash reserves for future required payments, including final payments, until the properties’ leasing conditions are cured. |
(3) | These five mortgage loans are cross-collateralized. |
(4) | In accordance with the provisions of this loan, the property’s excess cash proceeds after the payment of debt service, impounds and budgeted operating expenses were held by the lender. In January 2016, this loan was paid in full. |
(5) | These mortgage loans were related to properties that were classified as held for sale as of December 31, 2015, and accordingly the mortgage loans were included within liabilities related to assets held for sale on the Condensed Consolidated Balance Sheet as of December 31, 2015. These properties were sold and their loans were paid off during the six months ended June 30, 2016. |
(6) | During the first quarter of 2016, the Company adopted accounting guidance related to the presentation of deferred financing costs on the balance sheet and reclassified amounts from the deferred costs line to net against the liability for all periods presented, including for mortgage notes payable, as shown here. See Note 2, “Summary of Significant Accounting Policies,” for further information. |
Unswapped Interest Rate | Effective Interest Rate(1) | Maturity Date | Outstanding Balance | ||||||||||||
June 30, 2016 | December 31, 2015 | ||||||||||||||
2015 Revolving Credit Facility - USD tranche | 1.70 | % | 1.70 | % | 1/8/2020 | $ | 120,000 | $ | 275,000 | ||||||
2015 Revolving Credit Facility - Multicurrency tranche | 1.20 | % | 1.20 | % | 1/8/2020 | 49,950 | 21,724 | ||||||||
3-Year Term Loan | 1.85 | % | 1.85 | % | 1/8/2019 | 300,000 | 300,000 | ||||||||
5-Year Term Loan | 1.85 | % | 2.95 | % | 1/8/2021 | 750,000 | 750,000 | ||||||||
7-Year Term Loan | 2.21 | % | 3.57 | % | 1/9/2023 | 175,000 | 175,000 | ||||||||
Total Unsecured Revolving Credit and Term Loan Facilities | $ | 1,394,950 | $ | 1,521,724 |
(1) | Represents the rate at which interest expense is recorded for financial reporting purposes, which reflects the effect of the interest rate swaps, excluding debt issuance costs. |
2015 Revolving Credit Facility | Term Loans | Mortgage Notes Payable | Senior Unsecured Notes | Exchangeable Senior Notes | Interest Payments | Total | |||||||||||||||||||||
July 1 to December 31, 2016 | $ | — | $ | — | $ | 40,129 | $ | — | $ | — | $ | 32,423 | $ | 72,552 | |||||||||||||
2017 | — | — | 66,499 | — | — | 62,426 | 128,925 | ||||||||||||||||||||
2018 | — | — | 93,936 | — | — | 59,661 | 153,597 | ||||||||||||||||||||
2019 | — | 300,000 | 42,840 | — | 115,000 | 50,816 | 508,656 | ||||||||||||||||||||
2020 | 169,950 | — | 174,975 | — | — | 42,637 | 387,562 | ||||||||||||||||||||
Thereafter | — | 925,000 | 103,514 | 150,000 | — | 59,332 | 1,237,846 | ||||||||||||||||||||
Above market interest | — | — | — | — | — | 2,591 | 2,591 | ||||||||||||||||||||
Total | $ | 169,950 | $ | 1,225,000 | $ | 521,893 | $ | 150,000 | $ | 115,000 | $ | 309,886 | $ | 2,491,729 |
Operating Leases | |||
July 1 to December 31, 2016 | $ | 183,381 | |
2017 | 365,384 | ||
2018 | 348,757 | ||
2019 | 320,501 | ||
2020 | 286,879 | ||
Thereafter | 1,688,352 | ||
Total minimum lease rental income | $ | 3,193,254 |
June 30, 2016 | December 31, 2015 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Financial assets: | |||||||||||||||
Retained CDO Bonds(1) | $ | 9,322 | $ | 9,322 | $ | 7,471 | $ | 7,471 | |||||||
Investment in CBRE Strategic Partners Asia | $ | 5,162 | $ | 5,162 | $ | 5,508 | $ | 5,508 | |||||||
Real estate investments classified as held for sale at Merger closing(2) | $ | 9,752 | $ | 9,752 | $ | 393,984 | $ | 393,984 | |||||||
Financial liabilities: | |||||||||||||||
Derivative instruments | |||||||||||||||
Interest rate swaps | $ | 36,357 | $ | 36,357 | $ | 3,442 | $ | 3,442 | |||||||
Foreign currency forward contract | $ | 378 | $ | 378 | $ | — | $ | — | |||||||
Long-term debt | |||||||||||||||
Revolving credit facilities(3) | $ | 169,950 | $ | 171,389 | $ | 296,724 | $ | 297,394 | |||||||
3-Year Term Loan(3) | $ | 300,000 | $ | 300,531 | $ | 300,000 | $ | 300,349 | |||||||
5-Year Term Loan(3) | $ | 750,000 | $ | 751,069 | $ | 750,000 | $ | 751,304 | |||||||
7-Year Term Loan(3) | $ | 175,000 | $ | 175,025 | $ | 175,000 | $ | 175,338 | |||||||
Mortgage notes payable(3), (4) | $ | 532,981 | $ | 553,745 | $ | 770,293 | $ | 805,590 | |||||||
Senior Unsecured Notes(3) | $ | 148,953 | $ | 159,199 | $ | 100,000 | $ | 100,528 | |||||||
Exchangeable Senior Notes(3) | $ | 107,550 | $ | 117,463 | $ | 109,394 | $ | 115,524 |
(1) | Retained CDO Bonds represent the CDOs’ subordinate bonds, preferred shares, and ordinary shares, which were retained subsequent to the disposal of Gramercy Finance and were previously eliminated in consolidation. |
(2) | Amounts include one and six real estate investments as of June 30, 2016 and December 31, 2015, respectively, classified as held for sale at Merger closing, which are included in discontinued operations. |
(3) | Long-term debt instruments are classified as Level III due to the significance of unobservable inputs which are based upon management assumptions. |
(4) | Amounts include mortgage notes payable on assets held for sale as of December 31, 2015, which had total carrying value of $260,704 and total fair value of $263,308 as of December 31, 2015. There were no mortgage notes payable on assets held for sale as of June 30, 2016. |
At June 30, 2016 | Total | Level I | Level II | Level III | ||||||||||||
Financial Assets: | ||||||||||||||||
Retained CDO Bonds: | ||||||||||||||||
Non-investment grade, subordinate CDO bonds | $ | 9,322 | $ | — | $ | — | $ | 9,322 | ||||||||
Marketable securities: | ||||||||||||||||
Investment in CBRE Strategic Partners Asia | 5,162 | — | — | 5,162 | ||||||||||||
Real estate investments classified as held for sale at Merger closing | 9,752 | — | — | 9,752 | ||||||||||||
$ | 24,236 | $ | — | $ | — | $ | 24,236 | |||||||||
Financial Liabilities: | ||||||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swaps | $ | 36,357 | $ | — | $ | — | $ | 36,357 | ||||||||
Foreign currency forward contract | 378 | — | 378 | — | ||||||||||||
$ | 36,735 | $ | — | $ | 378 | $ | 36,357 |
At December 31, 2015 | Total | Level I | Level II | Level III | ||||||||||||
Financial Assets: | ||||||||||||||||
Retained CDO Bonds: | ||||||||||||||||
Non-investment grade, subordinate CDO bonds | $ | 7,471 | $ | — | $ | — | $ | 7,471 | ||||||||
Marketable securities: | ||||||||||||||||
Investment in CBRE Strategic Partners Asia | 5,508 | — | — | 5,508 | ||||||||||||
Real estate investments classified as held for sale at Merger closing | 393,984 | — | — | 393,984 | ||||||||||||
$ | 406,963 | $ | — | $ | — | $ | 406,963 | |||||||||
Financial Liabilities: | ||||||||||||||||
Derivative instruments: | ||||||||||||||||
Interest rate swaps | $ | 3,442 | $ | — | $ | — | $ | 3,442 | ||||||||
$ | 3,442 | $ | — | $ | — | $ | 3,442 |
At June 30, 2016 | ||||||||||
Financial Asset or Liability | Fair Value | Valuation Technique | Unobservable Inputs | Range | ||||||
Non-investment grade, subordinate CDO bonds | $ | 9,322 | Discounted cash flows | Discount rate | 25.00% | |||||
Interest rate swaps | $ | 36,357 | Hypothetical derivative method | Credit borrowing spread | 116 to 260 basis points | |||||
Investment in CBRE Strategic Partners Asia | $ | 5,162 | Discounted cash flows | Discount rate | 20.00% |
Retained CDO Bonds | Investment in CBRE Strategic Partners Asia | Total Financial Assets – Level III | |||||||||
Balance as of December 31, 2015 | $ | 7,471 | $ | 5,508 | $ | 12,979 | |||||
Amortization of discounts or premiums | 884 | — | 884 | ||||||||
Adjustments to fair value: | |||||||||||
Unrealized gain in other comprehensive income from fair value adjustment | 967 | — | 967 | ||||||||
Total income on fair value adjustment | — | (32 | ) | (32 | ) | ||||||
Purchase price allocation adjustments | — | (314 | ) | (314 | ) | ||||||
Balance as of June 30, 2016 | $ | 9,322 | $ | 5,162 | $ | 14,484 |
Derivative Instruments(1) | |||
Balance as of December 31, 2015 | $ | 3,442 | |
Adjustments to fair value: | |||
Ineffective portion of change in derivative instruments | (734 | ) | |
Unrealized loss on derivatives | 33,649 | ||
Balance as of June 30, 2016 | $ | 36,357 |
Benchmark Rate | Notional Value | Strike Rate | Effective Date | Expiration Date | Fair Value | |||||||||
Interest Rate Swap - Waco | 1 mo. USD-LIBOR-BBA | 15,336 USD | 4.55% | 12/19/2013 | 12/19/2020 | $ | 1,028 | |||||||
Interest Rate Swap - Point West I | 1 mo. USD-LIBOR-BBA | 10,228 USD | 1.41% | 8/16/2011 | 12/6/2016 | 42 | ||||||||
Interest Rate Swap - Atrium I | 1 mo. USD-LIBOR-BBA | 20,176 USD | 1.78% | 8/16/2011 | 5/31/2018 | 445 | ||||||||
Interest Rate Swap - Easton III | 1 mo. USD-LIBOR-BBA | 6,001 USD | 1.95% | 8/16/2011 | 1/31/2019 | 196 | ||||||||
Interest Rate Swap - 5-Year Term Loan | 1 mo. USD-LIBOR-BBA | 750,000 USD | 1.60% | 12/17/2015 | 12/17/2020 | 25,621 | ||||||||
Interest Rate Swap - 7-Year Term Loan | 1 mo. USD-LIBOR-BBA | 175,000 USD | 1.82% | 12/17/2015 | 1/9/2023 | 9,025 | ||||||||
Foreign Currency Forward Contract(1) | USD-EUR exchange rate | 134,000 Euros | 1.1081 USD-EUR | 6/30/2016 | 7/6/2016 | 378 | ||||||||
Non-Derivative Net Investment Hedge in the Gramercy European Property Fund | USD-EUR exchange rate | 45,000 Euros | N/A | 9/28/2015 | N/A | — | ||||||||
Total | $ | 36,735 |
(1) | Represents the exchange rate locked in by the Company for the term of the foreign currency forward contract. The Company settled the contract on July 6, 2016. |
Quarter Ended | Record Date | Payment Date | Common dividend per share | |||||
March 31, 2016 | March 31, 2016 | April 15, 2016 | $ | 0.110 | ||||
June 30, 2016 | June 30, 2016 | July 15, 2016 | $ | 0.110 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Numerator – Income (loss): | |||||||||||||||
Net income (loss) from continuing operations | $ | 23,565 | $ | (607 | ) | $ | 17,872 | $ | (583 | ) | |||||
Net income from discontinued operations | 58 | 120 | 4,698 | 58 | |||||||||||
Income (loss) before gains on disposals | 23,623 | (487 | ) | 22,570 | (525 | ) | |||||||||
Net gains on disposals | — | 201 | — | 201 | |||||||||||
Gain on sale of European unconsolidated equity investment interests held with a related party | 5,341 | — | 5,341 | — | |||||||||||
Net income (loss) | 28,964 | (286 | ) | 27,911 | (324 | ) | |||||||||
Net (income) loss attributable to noncontrolling interest | (51 | ) | 21 | 69 | 63 | ||||||||||
Nonforfeitable dividends allocated to unvested restricted shareholders | (201 | ) | — | (400 | ) | — | |||||||||
Preferred share dividends | (1,558 | ) | (1,558 | ) | (3,117 | ) | (3,117 | ) | |||||||
Net income (loss) available to vested common shares outstanding | $ | 27,154 | $ | (1,823 | ) | $ | 24,463 | $ | (3,378 | ) | |||||
Denominator – Weighted average shares (1): | |||||||||||||||
Weighted average basic shares outstanding | 422,330,927 | 177,393,521 | 421,994,655 | 163,332,554 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Unvested share based payment awards | 1,813,391 | — | 1,813,391 | — | |||||||||||
Options | 43,618 | — | 31,176 | — | |||||||||||
Shares related to OP Units | 1,208,309 | — | 1,291,305 | — | |||||||||||
Exchangeable Senior Notes | 2,146,360 | — | 1,135,244 | — | |||||||||||
Diluted Shares | 427,542,605 | 177,393,521 | 426,265,771 | 163,332,554 |
(1) | As a result of the Merger, each outstanding share of common stock of Legacy Gramercy was converted into 3.1898 of a newly issued common share of the Company. Therefore, the historical data related to quarterly earnings per common share for the periods ended before December 31, 2015 have been adjusted by the Merger exchange ratio of 3.1898. |
June 30, 2016 | December 31, 2015 | ||||||
Net unrealized loss on derivative securities | $ | (39,723 | ) | $ | (6,074 | ) | |
Net unrealized gain on debt instruments | 1,977 | 1,010 | |||||
Foreign currency translation adjustments: | |||||||
Gain (loss) on non-derivative net investment hedge(1) | (52 | ) | 14 | ||||
Other foreign currency translation adjustments | (3,157 | ) | (656 | ) | |||
Reclassification of accumulated foreign currency translation adjustments due to disposal | (3,737 | ) | — | ||||
Reclassification of swap gain (loss) into interest expense | 586 | (45 | ) | ||||
Total accumulated other comprehensive loss | $ | (44,106 | ) | $ | (5,751 | ) |
(1) | The foreign currency translation adjustment associated with the Company’s non-derivative net investment hedge related to its equity investment in the Gramercy European Property Fund is included in other comprehensive income (loss). |
Noncontrolling Interest | |||
Balance as of December 31, 2015 | $ | 10,892 | |
Issuance of noncontrolling interests in the Company’s Operating Partnership | — | ||
Redemption of noncontrolling interests in the Company’s Operating Partnership | (2,204 | ) | |
Net loss attribution | 70 | ||
Fair value adjustments | 2,159 | ||
Dividends | (358 | ) | |
Balance as of June 30, 2016 | $ | 10,559 |
Ground Leases - Operating | Ground Leases - Capital | Total | |||||||||
July 1 to December 31, 2016 | $ | 889 | $ | — | $ | 889 | |||||
2017 | 1,728 | — | 1,728 | ||||||||
2018 | 1,731 | — | 1,731 | ||||||||
2019 | 1,740 | — | 1,740 | ||||||||
2020 | 1,732 | — | 1,732 | ||||||||
Thereafter | 48,062 | 329 | 48,391 | ||||||||
Total minimum rent expense | $ | 55,882 | $ | 329 | $ | 56,211 |
Asset Management | Investments / Corporate | Total Company | |||||||||
Three Months Ended June 30, 2016 | |||||||||||
Total revenues | $ | 18,423 | $ | 121,002 | $ | 139,425 | |||||
Equity in net loss from unconsolidated equity investments | — | (168 | ) | (168 | ) | ||||||
Total operating and interest expense(1) | (8,523 | ) | (107,169 | ) | (115,692 | ) | |||||
Net income from continuing operations | $ | 9,900 | $ | 13,665 | $ | 23,565 |
Asset Management | Investments / Corporate | Total Company | |||||||||
Three Months Ended June 30, 2015 | |||||||||||
Total revenues | $ | 4,228 | $ | 49,919 | $ | 54,147 | |||||
Equity in net loss from unconsolidated equity investments | — | 123 | 123 | ||||||||
Total operating and interest expense(1) | (4,820 | ) | (50,057 | ) | (54,877 | ) | |||||
Net income (loss) from continuing operations | $ | (592 | ) | $ | (15 | ) | $ | (607 | ) |
Asset Management | Investments / Corporate | Total Company | |||||||||
Six Months Ended June 30, 2016 | |||||||||||
Total revenues | $ | 23,574 | $ | 236,396 | $ | 259,970 | |||||
Equity in net loss from unconsolidated equity investments | — | (2,923 | ) | (2,923 | ) | ||||||
Total operating and interest expense(1) | (13,982 | ) | (225,193 | ) | (239,175 | ) | |||||
Net income from continuing operations | $ | 9,592 | $ | 8,280 | $ | 17,872 |
Asset Management | Investments / Corporate | Total Company | |||||||||
Six Months Ended June 30, 2015 | |||||||||||
Total revenues | $ | 12,408 | $ | 89,674 | $ | 102,082 | |||||
Equity in net loss from unconsolidated equity investments | — | 122 | 122 | ||||||||
Total operating and interest expense(1) | (11,358 | ) | (91,429 | ) | (102,787 | ) | |||||
Net income (loss) from continuing operations | $ | 1,050 | $ | (1,633 | ) | $ | (583 | ) |
Asset Management | Investments / Corporate | Total Company | |||||||||
Total Assets: | |||||||||||
June 30, 2016 | $ | 23,711 | $ | 5,386,516 | $ | 5,410,227 | |||||
December 31, 2015 | $ | 5,882 | $ | 5,828,636 | $ | 5,834,518 |
(1) | Total operating and interest expense includes operating costs on commercial property assets for the Investments/Corporate segment and costs to perform required functions under the management agreement for the Asset Management segment. Depreciation and amortization of $60,538 and $24,716 and provision for taxes of $2,700 and $17 for the three months ended June 30, 2016 and 2015, respectively, are included in the amounts presented above. Depreciation and amortization of $118,786 and $43,414 and provision for taxes of $3,403 and $1,131 for the six months ended June 30, 2016 and 2015, respectively, are included in the amounts presented above. |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Supplemental cash flow disclosures: | |||||||
Interest paid | $ | 40,639 | $ | 11,820 | |||
Income taxes paid | 743 | 1,065 | |||||
Proceeds from 1031 exchanges from sale of real estate | 270,429 | 8,619 | |||||
Use of funds from 1031 exchanges for acquisitions of real estate | (227,521 | ) | (5,050 | ) | |||
Non-cash activity: | |||||||
Fair value adjustment to noncontrolling interest in the operating partnership | $ | 2,159 | $ | (1,490 | ) | ||
Debt assumed in acquisition of real estate | 45,958 | 141,033 | |||||
Debt transferred in disposition of real estate | (101,432 | ) | — | ||||
Redemption of units of noncontrolling interest in the operating partnership for common shares | (2,204 | ) | (3,127 | ) | |||
Distribution of real estate assets from unconsolidated equity investment | 263,015 | — | |||||
Non-cash activities recognized in other comprehensive income: | |||||||
Change in net unrealized loss on securities available for sale | $ | 967 | $ | 5,761 | |||
Deferred losses and other non-cash activity related to derivatives | (33,649 | ) | (664 | ) | |||
Non-cash effect of foreign currency translation adjustments | (2,567 | ) | 51 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Properties | Number of Properties | Rentable Square Feet | Occupancy | ||||||
Industrial | 172 | 42,216,785 | 98.9 | % | |||||
Office | 108 | 9,539,561 | 98.2 | % | |||||
Specialty retail | 9 | 1,187,258 | 100.0 | % | |||||
Total | 289 | 52,943,604 | 98.8 | % |
Property Type(1) | Number of Properties | Square Feet | Purchase Price | |||||||
Industrial(2) | 28 | 8,359,186 | $ | 566,859 | ||||||
Office(2) | 4 | 310,072 | 58,050 | |||||||
Total | 32 | 8,669,258 | $ | 624,909 |
(1) | Includes seven properties distributed to us from the Duke JV, of which five were industrial properties that comprise 3,909,945 square feet and two were office properties that comprise 278,451 square feet. Two of the properties distributed to us were encumbered by mortgages, of which the unpaid aggregate principal value was $12,931 at the time of distribution. |
(2) | We assumed mortgages on 11 of our property acquisitions in 2016. The unpaid principal value of the mortgages assumed at acquisition was $45,958. Refer to Note 6 for more information on our debt obligations related to acquisitions. |
2016 | 2015 | Change | |||||||||
Rental revenue | $ | 98,517 | $ | 39,565 | $ | 58,952 | |||||
Third-party management fees | 18,310 | 4,232 | 14,078 | ||||||||
Operating expense reimbursements | 21,905 | 9,738 | 12,167 | ||||||||
Investment income | 503 | 525 | (22 | ) | |||||||
Other income | 190 | 87 | 103 | ||||||||
Total revenues | $ | 139,425 | $ | 54,147 | $ | 85,278 | |||||
Equity in net income (loss) of unconsolidated equity investments | $ | (168 | ) | $ | 123 | $ | (291 | ) |
2016 | 2015 | Change | |||||||||
Property operating expenses | $ | 23,510 | $ | 9,572 | $ | 13,938 | |||||
Property management expenses | 5,591 | 4,611 | 980 | ||||||||
Depreciation and amortization | 60,538 | 24,716 | 35,822 | ||||||||
General and administrative expenses | 8,005 | 4,778 | 3,227 | ||||||||
Acquisition and merger-related expenses | 4,312 | 3,455 | 857 | ||||||||
Interest expense | 16,909 | 7,728 | 9,181 | ||||||||
Gain on dissolution of previously held U.S. unconsolidated equity investment interests | (7,229 | ) | — | (7,229 | ) | ||||||
Loss on extinguishment of debt | 1,356 | — | 1,356 | ||||||||
Provision for taxes | 2,700 | 17 | 2,683 | ||||||||
Net gains on disposals | — | (201 | ) | 201 | |||||||
Gain on sale of European unconsolidated equity investment interests held with a related party | (5,341 | ) | — | (5,341 | ) | ||||||
Total expenses | $ | 110,351 | $ | 54,676 | $ | 55,675 |
2016 | 2015 | Change | |||||||||
Rental revenue | $ | 190,612 | $ | 70,755 | $ | 119,857 | |||||
Third-party management fees | 23,356 | 12,418 | 10,938 | ||||||||
Operating expense reimbursements | 44,487 | 17,876 | 26,611 | ||||||||
Investment income | 946 | 763 | 183 | ||||||||
Other income | 569 | 270 | 299 | ||||||||
Total revenues | $ | 259,970 | $ | 102,082 | $ | 157,888 | |||||
Equity in net income (loss) of unconsolidated equity investments | $ | (2,923 | ) | $ | 122 | $ | (3,045 | ) |
2016 | 2015 | Change | |||||||||
Property operating expenses | $ | 47,679 | $ | 17,955 | $ | 29,724 | |||||
Property management expenses | 10,112 | 9,777 | 335 | ||||||||
Depreciation and amortization | 118,786 | 43,414 | 75,372 | ||||||||
General and administrative expenses | 15,727 | 9,551 | 6,176 | ||||||||
Acquisition and merger-related expenses | 4,722 | 6,961 | (2,239 | ) | |||||||
Interest expense | 38,862 | 13,998 | 24,864 | ||||||||
Gain on dissolution of previously held U.S. unconsolidated equity investment interests | (7,229 | ) | — | (7,229 | ) | ||||||
Loss on extinguishment of debt | 7,113 | — | 7,113 | ||||||||
Provision for taxes | 3,403 | 1,131 | 2,272 | ||||||||
Net gains on disposals | — | (201 | ) | 201 | |||||||
Gain on sale of European unconsolidated equity investment interests held with a related party | (5,341 | ) | — | (5,341 | ) | ||||||
Total expenses | $ | 233,834 | $ | 102,586 | $ | 131,248 |
Same Store | Acquisition | Development and Other | Asset Management and Corporate | Total | |||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | % Change | ||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||||
Rental revenue | $ | 42,635 | $ | 36,786 | 16 | % | $ | 53,635 | $ | 1,819 | $ | 2,247 | $ | 960 | $ | — | $ | — | $ | 98,517 | $ | 39,565 | 149 | % | |||||||||||||||||||||
Third-party management fees | — | — | — | % | — | — | — | — | 18,310 | 4,232 | 18,310 | 4,232 | 333 | % | |||||||||||||||||||||||||||||||
Operating expense reimbursements | 11,035 | 9,419 | 17 | % | 10,506 | 144 | 364 | 175 | — | — | 21,905 | 9,738 | 125 | % | |||||||||||||||||||||||||||||||
Investment income | — | — | — | % | — | — | — | — | 503 | 525 | 503 | 525 | (4 | )% | |||||||||||||||||||||||||||||||
Other income | (17 | ) | 47 | (136 | )% | 265 | — | — | 8 | (58 | ) | 32 | 190 | 87 | 118 | % | |||||||||||||||||||||||||||||
Total revenues | 53,653 | 46,252 | 16 | % | 64,406 | 1,963 | 2,611 | 1,143 | 18,755 | 4,789 | 139,425 | 54,147 | 157 | % | |||||||||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||||||||||||||||||
Property operating expenses | 11,008 | 9,566 | 15 | % | 13,786 | (6 | ) | 714 | 252 | (1,998 | ) | (240 | ) | 23,510 | 9,572 | 146 | % | ||||||||||||||||||||||||||||
Property management expenses | — | — | — | % | — | — | — | — | 5,591 | 4,611 | 5,591 | 4,611 | 21 | % | |||||||||||||||||||||||||||||||
Depreciation and amortization | 26,812 | 22,845 | 17 | % | 32,612 | 1,005 | 907 | 642 | 207 | 224 | 60,538 | 24,716 | 145 | % | |||||||||||||||||||||||||||||||
General and administrative expenses | — | — | — | % | — | — | — | — | 8,005 | 4,778 | 8,005 | 4,778 | 68 | % | |||||||||||||||||||||||||||||||
Acquisition and merger-related expenses | — | 14 | (100 | )% | 2,680 | 712 | — | — | 1,632 | 2,729 | 4,312 | 3,455 | 25 | % | |||||||||||||||||||||||||||||||
Total operating expenses | 37,820 | 32,425 | 17 | % | 49,078 | 1,711 | 1,621 | 894 | 13,437 | 12,102 | 101,956 | 47,132 | 116 | % | |||||||||||||||||||||||||||||||
Operating Income | 15,833 | 13,827 | 15 | % | 15,328 | 252 | 990 | 249 | 5,318 | (7,313 | ) | 37,469 | 7,015 | 434 | % | ||||||||||||||||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (3,239 | ) | (3,267 | ) | (1 | )% | (2,244 | ) | — | (107 | ) | — | (11,319 | ) | (4,461 | ) | (16,909 | ) | (7,728 | ) | 119 | % | |||||||||||||||||||||||
Equity in net income (loss) of unconsolidated equity investments | — | — | — | % | — | — | — | — | (168 | ) | 123 | (168 | ) | 123 | (237 | )% | |||||||||||||||||||||||||||||
Gain on sale of previously held U.S. unconsolidated equity investment interests | — | — | — | % | — | — | — | — | 7,229 | — | 7,229 | — | 100 | % | |||||||||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | % | (1,356 | ) | — | — | — | — | — | (1,356 | ) | — | (100 | )% | |||||||||||||||||||||||||||||
Income (loss) from continuing operations before provision for taxes | 12,594 | 10,560 | 19 | % | 11,728 | 252 | 883 | 249 | 1,060 | (11,651 | ) | 26,265 | (590 | ) | (4,552 | )% | |||||||||||||||||||||||||||||
Provision for taxes | — | — | — | % | — | — | — | — | (2,700 | ) | (17 | ) | (2,700 | ) | (17 | ) | 15,782 | % | |||||||||||||||||||||||||||
Income (loss) from continuing operations | 12,594 | 10,560 | 19 | % | 11,728 | 252 | 883 | 249 | (1,640 | ) | (11,668 | ) | 23,565 | (607 | ) | (3,982 | )% | ||||||||||||||||||||||||||||
Income (loss) from discontinued operations | — | — | — | % | 239 | — | (11 | ) | — | (170 | ) | 120 | 58 | 120 | (52 | )% | |||||||||||||||||||||||||||||
Income (loss) before net gains on disposals | 12,594 | 10,560 | 19 | % | 11,967 | 252 | 872 | 249 | (1,810 | ) | (11,548 | ) | 23,623 | (487 | ) | (4,951 | )% | ||||||||||||||||||||||||||||
Net gains on disposals | — | — | — | % | — | — | — | 201 | — | — | — | 201 | (100 | )% | |||||||||||||||||||||||||||||||
Gain on sale of European unconsolidated equity investment interests held with a related party | — | — | — | % | — | — | — | — | 5,341 | — | 5,341 | — | 100 | % | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 12,594 | $ | 10,560 | 19 | % | $ | 11,967 | $ | 252 | $ | 872 | $ | 450 | $ | 3,531 | $ | (11,548 | ) | $ | 28,964 | $ | (286 | ) | (10,227 | )% |
Same Store | Acquisition | Development and Other | Asset Management and Corporate | Total | |||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | % Change | ||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||||
Rental revenue | $ | 57,875 | $ | 52,517 | 10 | % | $ | 125,270 | $ | 16,303 | $ | 7,467 | $ | 1,935 | $ | — | $ | — | $ | 190,612 | $ | 70,755 | 169 | % | |||||||||||||||||||||
Third-party management fees | — | — | — | % | — | — | — | — | 23,356 | 12,418 | 23,356 | 12,418 | 88 | % | |||||||||||||||||||||||||||||||
Operating expense reimbursements | 18,393 | 16,653 | 10 | % | 24,540 | 773 | 1,554 | 450 | — | — | 44,487 | 17,876 | 149 | % | |||||||||||||||||||||||||||||||
Investment income | — | — | — | % | — | — | — | — | 946 | 763 | 946 | 763 | 24 | % | |||||||||||||||||||||||||||||||
Other income | 6 | 204 | (97 | )% | 469 | — | 8 | 8 | 86 | 58 | 569 | 270 | 111 | % | |||||||||||||||||||||||||||||||
Total revenues | 76,274 | 69,374 | 10 | % | 150,279 | 17,076 | 9,029 | 2,393 | 24,388 | 13,239 | 259,970 | 102,082 | 155 | % | |||||||||||||||||||||||||||||||
Operating Expenses | |||||||||||||||||||||||||||||||||||||||||||||
Property operating expenses | 18,543 | 16,722 | 11 | % | 30,774 | 896 | 2,396 | 644 | (4,034 | ) | (307 | ) | 47,679 | 17,955 | 166 | % | |||||||||||||||||||||||||||||
Property management expenses | — | — | — | % | — | — | — | — | 10,112 | 9,777 | 10,112 | 9,777 | 3 | % | |||||||||||||||||||||||||||||||
Depreciation and amortization | 34,849 | 28,921 | 20 | % | 79,933 | 12,367 | 3,566 | 1,686 | 438 | 440 | 118,786 | 43,414 | 174 | % | |||||||||||||||||||||||||||||||
General and administrative expenses | — | — | — | % | — | — | — | — | 15,727 | 9,551 | 15,727 | 9,551 | 65 | % | |||||||||||||||||||||||||||||||
Acquisition and merger-related expenses | — | 1 | (100 | )% | 2,770 | 3,179 | 6 | 46 | 1,946 | 3,735 | 4,722 | 6,961 | (32 | )% | |||||||||||||||||||||||||||||||
Total operating expenses | 53,392 | 45,644 | 17 | % | 113,477 | 16,442 | 5,968 | 2,376 | 24,189 | 23,196 | 197,026 | 87,658 | 125 | % | |||||||||||||||||||||||||||||||
Operating Income | 22,882 | 23,730 | (4 | )% | 36,802 | 634 | 3,061 | 17 | 199 | (9,957 | ) | 62,944 | 14,424 | 336 | % | ||||||||||||||||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (3,579 | ) | (3,650 | ) | (2 | )% | (7,458 | ) | (1,880 | ) | (210 | ) | 1 | (27,615 | ) | (8,469 | ) | (38,862 | ) | (13,998 | ) | 178 | % | ||||||||||||||||||||||
Equity in net income of unconsolidated equity investments | — | — | — | % | — | — | — | — | (2,923 | ) | 122 | (2,923 | ) | 122 | (2,496 | )% | |||||||||||||||||||||||||||||
Gain on dissolution of previously held U.S. unconsolidated equity investment interests | — | — | — | % | — | — | — | — | 7,229 | — | 7,229 | — | 100 | % | |||||||||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | % | (7,113 | ) | — | — | — | — | — | (7,113 | ) | — | (100 | )% | |||||||||||||||||||||||||||||
Income (loss) from continuing operations before provision for taxes | 19,303 | 20,080 | (4 | )% | 22,231 | (1,246 | ) | 2,851 | 18 | (23,110 | ) | (18,304 | ) | 21,275 | 548 | 3,782 | % | ||||||||||||||||||||||||||||
Provision for taxes | (1 | ) | 2 | (150 | )% | — | — | — | — | (3,402 | ) | (1,133 | ) | (3,403 | ) | (1,131 | ) | 201 | % | ||||||||||||||||||||||||||
Income (loss) from continuing operations | 19,302 | 20,082 | (4 | )% | 22,231 | (1,246 | ) | 2,851 | 18 | (26,512 | ) | (19,437 | ) | 17,872 | (583 | ) | (3,166 | )% | |||||||||||||||||||||||||||
Income (loss) from discontinued operations | — | — | — | % | 400 | — | 4,314 | — | (16 | ) | 58 | 4,698 | 58 | 8,000 | % | ||||||||||||||||||||||||||||||
Income (loss) before net gains on disposals | 19,302 | 20,082 | (4 | )% | 22,631 | (1,246 | ) | 7,165 | 18 | (26,528 | ) | (19,379 | ) | 22,570 | (525 | ) | (4,399 | )% | |||||||||||||||||||||||||||
Net gains on disposals | — | — | — | % | — | — | — | 201 | — | — | — | 201 | (100 | )% | |||||||||||||||||||||||||||||||
Gain on sale of European unconsolidated equity investment interests held with a related party | — | — | — | % | — | — | — | — | 5,341 | — | 5,341 | — | 100 | % | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 19,302 | $ | 20,082 | (4 | )% | $ | 22,631 | $ | (1,246 | ) | $ | 7,165 | $ | 219 | $ | (21,187 | ) | $ | (19,379 | ) | $ | 27,911 | $ | (324 | ) | (8,715 | )% |
Benchmark Rate | Notional Value | Strike Rate | Effective Date | Expiration Date | Fair Value | |||||||||
Interest Rate Swap - Waco | 1 mo. USD-LIBOR-BBA | 15,336 USD | 4.55% | 12/19/2013 | 12/19/2020 | $ | 1,028 | |||||||
Interest Rate Swap - Point West I | 1 mo. USD-LIBOR-BBA | 10,228 USD | 1.41% | 8/16/2011 | 12/6/2016 | 42 | ||||||||
Interest Rate Swap - Atrium I | 1 mo. USD-LIBOR-BBA | 20,176 USD | 1.78% | 8/16/2011 | 5/31/2018 | 445 | ||||||||
Interest Rate Swap - Easton III | 1 mo. USD-LIBOR-BBA | 6,001 USD | 1.95% | 8/16/2011 | 1/31/2019 | 196 | ||||||||
Interest Rate Swap - 5-Year Term Loan | 1 mo. USD-LIBOR-BBA | 750,000 USD | 1.60% | 12/17/2015 | 12/17/2020 | 25,621 | ||||||||
Interest Rate Swap - 7-Year Term Loan | 1 mo. USD-LIBOR-BBA | 175,000 USD | 1.82% | 12/17/2015 | 1/9/2023 | 9,025 | ||||||||
Foreign Currency Forward Contract(1) | USD-EUR exchange rate | 134,000 Euros | 1.1081 USD-EUR | 6/30/2016 | 7/6/2016 | 378 | ||||||||
Non-Derivative Net Investment Hedge in the Gramercy European Property Fund | USD-EUR exchange rate | 45,000 Euros | N/A | 9/28/2015 | N/A | — | ||||||||
Total | $ | 36,735 |
(1) | Represents the exchange rate we locked in for the term of the foreign currency forward contract. We settled the contract on July 6, 2016. |
2015 Unsecured Credit Facility | Term Loans | Mortgage Notes Payable | Senior Unsecured Notes | Exchangeable Senior Notes | Ground Leases | Interest Payments | Total | |||||||||||||||||||||||||
July 1 through December 31, 2016 | $ | — | $ | — | $ | 40,129 | $ | — | $ | — | $ | 32,423 | $ | 72,552 | ||||||||||||||||||
2017 | — | — | 66,499 | — | — | 62,426 | 128,925 | |||||||||||||||||||||||||
2018 | — | — | 93,936 | — | — | 59,661 | 153,597 | |||||||||||||||||||||||||
2019 | — | 300,000 | 42,840 | — | 115,000 | 50,816 | 508,656 | |||||||||||||||||||||||||
2020 | 169,950 | — | 174,975 | — | — | 42,637 | 387,562 | |||||||||||||||||||||||||
Thereafter | — | 925,000 | 103,514 | 150,000 | — | 59,332 | 1,237,846 | |||||||||||||||||||||||||
Above market interest | — | — | — | — | — | 2,591 | 2,591 | |||||||||||||||||||||||||
Total | $ | 169,950 | $ | 1,225,000 | $ | 521,893 | $ | 150,000 | $ | 115,000 | $ | — | $ | 309,886 | $ | 2,491,729 |
Operating Leases | |||
July 1 to December 31, 2016 | $ | 183,381 | |
2017 | 365,384 | ||
2018 | 348,757 | ||
2019 | 320,501 | ||
2020 | 286,879 | ||
Thereafter | 1,688,352 | ||
Total minimum lease rental income | $ | 3,193,254 |
Straight-line Rent Adjustments | |||
July 1 to December 31, 2016 | $ | 13,043 | |
2017 | 18,835 | ||
2018 | 13,969 | ||
2019 | 6,097 | ||
2020 | 1,234 | ||
Thereafter | (83,635 | ) | |
Total straight-line rent adjustments | $ | (30,457 | ) |
Quarter Ended | Common dividends per share (1) | Preferred dividends per share | ||||||
March 31, 2015 | $ | 0.063 | $ | 0.445 | ||||
June 30, 2015 | $ | 0.069 | $ | 0.445 | ||||
September 30, 2015 | $ | 0.069 | $ | 0.445 | ||||
December 31, 2015 | $ | 0.078 | $ | 0.445 | ||||
March 31, 2016 | $ | 0.110 | $ | 0.445 | ||||
June 30, 2016 | $ | 0.110 | $ | 0.445 |
(1) | Common dividends declared for a quarter are accrued for during the quarter and then paid to common shareholders of record as of the end of the quarter during the month following the quarter-end. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) attributable to common shareholders | $ | 27,355 | $ | (1,823 | ) | $ | 24,863 | $ | (3,378 | ) | |||||
Add: | |||||||||||||||
Depreciation and amortization | 60,538 | 24,716 | 118,786 | 43,414 | |||||||||||
FFO adjustments for unconsolidated equity investments | 7,465 | 121 | 18,771 | 199 | |||||||||||
Net (income) loss attributed to noncontrolling interest | 51 | (21 | ) | (69 | ) | (63 | ) | ||||||||
Net income from discontinued operations | (58 | ) | (120 | ) | (4,698 | ) | (58 | ) | |||||||
Less: | |||||||||||||||
Non real estate depreciation and amortization | (231 | ) | (223 | ) | (467 | ) | (439 | ) | |||||||
Gain on dissolution of previously held U.S. unconsolidated equity investment interests | (7,229 | ) | — | (7,229 | ) | — | |||||||||
Gain on sale of European unconsolidated equity investment interests held with a related party | (5,341 | ) | — | (5,341 | ) | — | |||||||||
Net gain from disposals | — | (201 | ) | — | (201 | ) | |||||||||
Funds from operations attributable to common shareholders and unitholders | $ | 82,550 | $ | 22,449 | $ | 144,616 | $ | 39,474 | |||||||
Add: | |||||||||||||||
Acquisition costs | 4,312 | 1,102 | 4,722 | 4,608 | |||||||||||
Core FFO adjustments for unconsolidated equity investments | 2,798 | — | 6,921 | — | |||||||||||
Merger related costs | — | 2,353 | — | 2,353 | |||||||||||
Loss on extinguishment of debt | 1,356 | — | 5,183 | — | |||||||||||
European Fund setup costs | — | — | — | 221 | |||||||||||
Net income from discontinued operations related to properties | 149 | — | 4,793 | — | |||||||||||
Mark-to-market on interest rate swaps | (2,564 | ) | — | (734 | ) | — | |||||||||
Core funds from operations attributable to common shareholders and unitholders | $ | 88,601 | $ | 25,904 | $ | 165,501 | $ | 46,656 | |||||||
Add: | |||||||||||||||
Non-cash share-based compensation expense | 1,272 | 849 | 2,422 | 1,683 | |||||||||||
Amortization of market lease assets | 3,682 | 1,063 | 7,676 | 1,933 | |||||||||||
Amortization of deferred financing costs and non-cash interest | 78 | 291 | 195 | 866 | |||||||||||
Amortization of lease inducement costs | 87 | 52 | 173 | 96 | |||||||||||
Non-real estate depreciation and amortization | 231 | 223 | 467 | 439 | |||||||||||
Amortization of free rent received at property acquisition | 417 | 1,146 | 756 | 1,725 | |||||||||||
Less: | |||||||||||||||
AFFO adjustments for unconsolidated equity investments | (1,232 | ) | (1 | ) | (409 | ) | (2 | ) | |||||||
Straight-lined rent | (5,955 | ) | (3,312 | ) | (12,716 | ) | (5,484 | ) | |||||||
Amortization of market lease liabilities | (9,292 | ) | (3,178 | ) | (13,449 | ) | (8,000 | ) | |||||||
Adjusted funds from operations attributable to common shareholders and unitholders | $ | 77,889 | $ | 23,037 | $ | 150,616 | $ | 39,912 | |||||||
Funds from operations per share – basic | $ | 0.19 | $ | 0.12 | $ | 0.34 | $ | 0.24 | |||||||
Funds from operations per share – diluted | $ | 0.19 | $ | 0.12 | $ | 0.34 | $ | 0.23 | |||||||
Core funds from operations per share – basic | $ | 0.21 | $ | 0.14 | $ | 0.39 | $ | 0.28 | |||||||
Core funds from operations per share – diluted | $ | 0.21 | $ | 0.14 | $ | 0.39 | $ | 0.28 | |||||||
Adjusted funds from operations per share – basic | $ | 0.18 | $ | 0.13 | $ | 0.36 | $ | 0.24 | |||||||
Adjusted funds from operations per share – diluted | $ | 0.18 | $ | 0.13 | $ | 0.35 | $ | 0.24 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Basic weighted average common shares outstanding – EPS | 422,330,927 | 177,393,521 | 421,994,655 | 163,332,554 | |||||||||||
Weighted average non-vested share based payment awards | — | 845,798 | — | 834,012 | |||||||||||
Weighted average partnership units held by noncontrolling interest | 1,208,309 | 1,548,246 | 1,291,305 | 1,624,396 | |||||||||||
Weighted average common shares and units outstanding | 423,539,236 | 179,787,565 | 423,285,960 | 165,790,962 | |||||||||||
Diluted weighted average common shares and common share equivalents outstanding – EPS (1) | 427,542,605 | 177,393,521 | 426,265,771 | 163,332,554 | |||||||||||
Weighted average partnership units held by noncontrolling interest | — | 1,548,246 | — | 1,624,396 | |||||||||||
Weighted average non-vested share based payment awards | — | 2,209,913 | — | 2,198,126 | |||||||||||
Weighted average share options | — | 48,051 | — | 49,062 | |||||||||||
Phantom shares | — | 493,124 | — | 493,124 | |||||||||||
Dilutive effect of Exchangeable Senior Notes | — | 1,107,808 | — | 1,425,092 | |||||||||||
Diluted weighted average common shares and units outstanding | 427,542,605 | 182,800,663 | 426,265,771 | 169,122,354 |
(1) | For the three and six months ended June 30, 2015, the diluted weighted average share calculation, which is the denominator in diluted earnings per share, excludes potentially dilutive securities because including them would have been anti-dilutive during those periods. |
• | the success or failure of our efforts to implement our current business strategy, including our ability to timely and profitably dispose of non-core assets and reinvest in target assets; |
• | our ability to accomplish our office asset disposition plan subject to the REIT prohibited transaction tax limitations; |
• | our ability to identify and complete additional property acquisitions and risks of real estate acquisitions; |
• | availability of investment opportunities on real estate assets and real estate-related and other securities; |
• | the performance and financial condition of tenants and corporate customers; |
• | the adequacy of our cash reserves, working capital and other forms of liquidity; |
• | the availability, terms and deployment of short-term and long-term capital; |
• | demand for industrial and office space; |
• | the actions of our competitors and our ability to respond to those actions; |
• | the timing of cash flows from our investments; |
• | the cost and availability of our financings, which depends in part on our asset quality, the nature of our relationships with our lenders and other capital providers, our business prospects and outlook and general market conditions; |
• | economic conditions generally and in the commercial finance and real estate markets and the banking industry specifically; |
• | our international operations, including unfavorable foreign currency rate fluctuations, enactment or changes in laws relating to foreign ownership of property, and local economic or political conditions that could adversely affect our earnings and cash flows; |
• | unanticipated increases in financing and other costs, including a rise in interest rates; |
• | reduction in cash flows received from our investments; |
• | volatility or reduction in the value or uncertain timing in the realization of our Retained CDO Bonds; |
• | our ability to profitably dispose of non-core assets; |
• | the high tenant concentration of our Bank of America Portfolio; |
• | availability of, and ability to retain, qualified personnel and trustees; |
• | changes to our management and board of trustees; |
• | changes in governmental regulations, tax rates and similar matters; |
• | legislative and regulatory changes (including changes to real estate and zoning laws, laws governing the taxation of REITs or the exemptions from registration as an investment company); |
• | environmental and/or safety requirements and risks related to natural disasters; |
• | declining real estate valuations and impairment charges; |
• | our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes and qualify for our exemption under the Investment Company Act, our Operating Partnership’s ability to satisfy the rules in order to qualify as a partnership for U.S. federal income tax purposes, and the ability of certain of our subsidiaries to qualify as REITs and certain of our subsidiaries to qualify as TRSs for U.S. federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules; |
• | uninsured or underinsured losses relating to our properties; |
• | our inability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies; |
• | tenant bankruptcies and defaults on or non-renewal of leases by tenants; |
• | decreased rental rates or increased vacancy rates; |
• | the continuing threat of terrorist attacks on the national, regional and local economies; and |
• | other factors discussed under Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2015, and those factors that may be contained in any filing we make with the Securities and Exchange Commission, or the SEC, which are incorporated by reference herein. |
Floating Rate Debt Instrument | Unswapped Interest Rate | Effective Interest Rate(1) | Maturity Date | Balance at June 30, 2016 | ||||||||
2015 Revolving Credit Facility | 1.70 | % | 1.70 | % | 1/8/2020 | $ | 120,000 | |||||
2015 Revolving Credit Facility - multicurrency tranche | 1.20 | % | 1.20 | % | 1/8/2020 | 49,950 | ||||||
3-Year Term Loan | 1.85 | % | 1.85 | % | 1/8/2019 | 300,000 | ||||||
5-Year Term Loan | 1.85 | % | 2.95 | % | 1/8/2021 | 750,000 | ||||||
7-Year Term Loan | 2.21 | % | 3.57 | % | 1/9/2023 | 175,000 | ||||||
Mortgage note payable - Waco | 2.26 | % | 4.55 | % | 12/19/2020 | 15,336 | ||||||
Mortgage note payable - Point West I | 2.25 | % | 3.41 | % | 12/6/2016 | 10,228 | ||||||
Mortgage note payable - Atrium I | 2.25 | % | 3.78 | % | 5/31/2018 | 20,176 | ||||||
Mortgage note payable - Easton III | 2.25 | % | 3.95 | % | 1/31/2019 | 6,001 | ||||||
Total Floating Rate Debt Instruments | $ | 1,446,691 |
(1) | Represents the rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of any discounts/premiums, excluding debt issuance costs. |
(2) | These floating rate debt instruments are not hedged by interest rate swaps. |
Change in LIBOR | Projected Decrease in Net Income | |||
Base case | ||||
+100 bps | $ | (1,201 | ) | |
+200 bps | $ | (2,402 | ) | |
+300 bps | $ | (3,603 | ) |
ITEM 4. | CONTROLS AND PROCEDURES |
PART II | OTHER INFORMATION |
ITEM 1. | LEGAL PROCEDINGS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | INDEX TO EXHIBITS |
Exhibit No. | Description | |
10.1 | Fourth Amended and Restated Agreement of Limited Partnership of GPT Operating Partnership LP, dated as of April 29, 2016, filed herewith. | |
10.2 | First Amendment to Term Loan Agreement, dated as of January 19, 2016, among GPT Operating Partnership LP, GPT Property Trust LP, Gramercy Property Trust, the lenders party thereto, and Capital One, National Association, as administrative agent, filed herewith. | |
10.3 | Second Amendment to Term Loan Agreement, dated as of March 24, 2016, among GPT Operating Partnership LP, GPT Property Trust LP, Gramercy Property Trust, the lenders party thereto, and Capital One, National Association, as administrative agent, filed herewith. | |
10.4 | Amendment No. 1 to Revolving Credit and Term Loan Agreement, dated as of May 19, 2016, among the GPT Operating Partnership LP, GPT Property Trust LP, Gramercy Property Trust, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, filed herewith. | |
10.5 | Gramercy Property Trust 2016 Equity Incentive Plan, incorporated by reference to Appendix A of the Company’s definitive proxy statement on Schedule 14A, filed with the SEC on April 29, 2016. | |
10.6 | Form of Restricted Share Award for Non-Employee Trustees, incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on June 24, 2016. | |
31.1 | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. | |
31.2 | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. | |
32.1 | Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith. | |
32.2 | Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith. | |
101.INS | XBRL Instance Document, filed herewith. | |
101.SCH | XBRL Taxonomy Extension Schema, filed herewith. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase, filed herewith. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase, filed herewith. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase, filed herewith. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase, filed herewith. | |
GRAMERCY PROPERTY TRUST | |||
Dated: August 4, 2016 | By:/s/ Jon W. Clark | ||
Name: Jon W. Clark | |||
Title: Chief Financial Officer (duly authorized officer and principal financial and accounting officer) |
ARTICLE I | DEFINED TERMS 2 |
ARTICLE II | ORGANIZATIONAL MATTERS 13 |
Section 2.01. | Organization 13 |
Section 2.02. | Name 13 |
Section 2.03. | Registered Office and Agent; Principal Office 13 |
Section 2.04. | Term 13 |
ARTICLE III | PURPOSE 13 |
Section 3.01. | Purpose and Business 13 |
Section 3.02. | Powers 14 |
Section 3.03. | Partnership Only for Purposes Specified 14 |
ARTICLE IV | CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS 14 |
Section 4.01. | Capital Contributions of the Partners 14 |
Section 4.02. | Issuances of Partnership Interests 15 |
Section 4.03. | No Preemptive Rights 17 |
Section 4.04. | Other Contribution Provisions 17 |
i |
Section 4.05. | No Interest on Capital 17 |
ARTICLE V | DISTRIBUTIONS 17 |
Section 5.01. | Requirement and Characterization of Distributions 17 |
Section 5.02. | Amounts Withheld 18 |
Section 5.03. | Distributions Upon Liquidation 18 |
Section 5.04. | Revisions to Reflect Issuance of Additional Partnership Interests 18 |
ARTICLE VI | ALLOCATIONS 18 |
Section 6.01. | Allocations For Capital Account Purposes 18 |
Section 6.02. | Revisions to Allocations to Reflect Issuance of Additional Partnership Interests 20 |
ARTICLE VII | MANAGEMENT AND OPERATIONS OF BUSINESS 21 |
Section 7.01. | Management 21 |
Section 7.02. | Certificate of Limited Partnership 24 |
Section 7.03. | Title to Partnership Assets 25 |
Section 7.04. | Reimbursement of the General Partner 25 |
ii |
Section 7.05. | Outside Activities of the General Partner 26 |
Section 7.06. | Transactions with Affiliates 28 |
Section 7.07. | Indemnification 28 |
Section 7.08. | Liability of the General Partner 30 |
Section 7.09. | Other Matters Concerning the General Partner 31 |
Section 7.10. | Reliance by Third Parties 32 |
Section 7.11. | Restrictions on General Partner’s Authority 32 |
Section 7.12. | Loans by Third Parties 33 |
ARTICLE VIII | RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 33 |
Section 8.01. | Limitation of Liability 33 |
Section 8.02. | Management of Business 33 |
Section 8.03. | Outside Activities of Limited Partners 33 |
Section 8.04. | Return of Capital 34 |
Section 8.05. | Rights of Limited Partners Relating to the Partnership 34 |
Section 8.06. | Class A Redemption Right 35 |
iii |
Section 8.07. | Redemption of 7.125% Series A Cumulative Redeemable Preferred Units 37 |
ARTICLE IX | BOOKS, RECORDS, ACCOUNTING AND REPORTS 37 |
Section 9.01. | Records and Accounting 37 |
Section 9.02. | Fiscal Year 38 |
Section 9.03. | Reports 38 |
ARTICLE X | TAX MATTERS 38 |
Section 10.01. | Preparation of Tax Returns 38 |
Section 10.02. | Tax Elections 39 |
Section 10.03. | Tax Matters Partner 39 |
Section 10.04. | Organizational Expenses 41 |
Section 10.05. | Withholding 41 |
Section 10.06. | Effect of Unit Exchanges 41 |
ARTICLE XI | TRANSFERS AND WITHDRAWALS 42 |
Section 11.01. | Transfer 42 |
Section 11.02. | Transfers of Partnership Interests of General Partner 42 |
iv |
Section 11.03. | Limited Partners’ Rights to Transfer 43 |
Section 11.04. | Substituted Limited Partners 44 |
Section 11.05. | Assignees 45 |
Section 11.06. | General Provisions 45 |
ARTICLE XII | ADMISSION OF PARTNERS 47 |
Section 12.01. | Admission of Successor General Partner 47 |
Section 12.02. | Admission of Additional Limited Partners 47 |
Section 12.03. | Amendment of Agreement and Certificate of Limited Partnership 48 |
ARTICLE XIII | DISSOLUTION AND LIQUIDATION 48 |
Section 13.01. | Dissolution 48 |
Section 13.02. | Winding Up 49 |
Section 13.03. | Compliance with Timing Requirements of Regulations 50 |
Section 13.04. | Deemed Distribution and Recontribution 50 |
Section 13.05. | Rights of Limited Partners 51 |
Section 13.06. | Notice of Dissolution 51 |
v |
Section 13.07. | Cancellation of Certificate of Limited Partnership 51 |
Section 13.08. | Reasonable Time for Winding Up 51 |
Section 13.09. | Waiver of Partition 51 |
Section 13.10. | Liability of Liquidator 51 |
ARTICLE XIV | AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS 52 |
Section 14.01. | Amendments 52 |
Section 14.02. | Meetings of the Partners 53 |
ARTICLE XV | GENERAL PROVISIONS 54 |
Section 15.01. | Addresses and Notice 54 |
Section 15.02. | Titles and Captions 54 |
Section 15.03. | Pronouns and Plurals 55 |
Section 15.04. | Further Action 55 |
Section 15.05. | Binding Effect 55 |
Section 15.06. | Creditors 55 |
Section 15.07. | Waiver 55 |
vi |
Section 15.08. | Counterparts 55 |
Section 15.09. | Applicable Law 55 |
Section 15.10. | Invalidity of Provisions 55 |
Section 15.11. | Power of Attorney 56 |
Section 15.12. | Entire Agreement 57 |
Section 15.13. | No Rights as Stockholders 57 |
Section 15.14. | Limitation to Preserve REIT Status 57 |
vii |
(a) | deleting in its entirety the phrase “(rounded upwards, if necessary, to the next 1/16 of 1%)” from the definition of “Adjusted LIBO Rate”; and |
(b) | deleting the definition of “Interest Period” therein in its entirety and inserting the following in lieu thereof: |
(a) | The Borrowers and Guarantor hereby represent, warrant and covenant with Administrative Agent and the Lenders that, as of the date hereof: |
GPT OPERATING PARTNERSHIP LP By: GRAMERCY PROPERTY TRUST, its General Partner By: /s/Benjamin P. Harris Name: Benjamin P. Harris Title: President | |
GPT PROPERTY TRUST LP By: COLUMBUS MERGER SUB, LLC, its General Partner By: /s/Benjamin P. Harris Name: Benjamin P. Harris Title: President | |
GRAMERCY PROPERTY TRUST By: /s/Benjamin P. Harris Name: Benjamin P. Harris Title: President |
ADMINISTRATIVE AGENT AND LENDER: CAPITAL ONE, NATIONAL ASSOCIATION, as Administrative Agent, and as a Lender By: /s/ Frederick H. Denecke Name: Frederick H. Denecke Title: Senior Vice President | |
(a) | deleting the definition of “Adjusted LIBO Rate” therein in its entirety and inserting the following in lieu thereof: |
(b) | deleting the definition of “LIBO Rate” therein in its entirety and inserting the following in lieu thereof: |
(a) | The Borrowers and Guarantor hereby represent, warrant and covenant with Administrative Agent and the Lenders that, as of the date hereof: |
GPT OPERATING PARTNERSHIP LP By: GRAMERCY PROPERTY TRUST, its General Partner By: /s/ Benjamin P. Harris Name: Benjamin P. Harris Title: President | |
GPT PROPERTY TRUST LP By: COLUMBUS MERGER SUB, LLC, its General Partner By: /s/ Benjamin P. Harris Name: Benjamin P. Harris Title: President | |
GRAMERCY PROPERTY TRUST By: /s/ Benjamin P. Harris Name: Benjamin P. Harris Title: President |
ADMINISTRATIVE AGENT AND LENDER: CAPITAL ONE, NATIONAL ASSOCIATION, as Administrative Agent, and as a Lender By: /s/ Frederick H. Denecke Name: Frederick H. Denecke Title: Senior Vice President | |
1. | I have reviewed this Quarterly Report on Form 10-Q of Gramercy Property Trust (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 4, 2016 | |||
/s/ | Gordon F. DuGan | ||
Name: Gordon F. DuGan | |||
Title: Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Gramercy Property Trust (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 4, 2016 | |||
/s/ | Jon W. Clark | ||
Name: Jon W. Clark | |||
Title: Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ | Gordon F. DuGan | ||
Name: Gordon F. DuGan | |||
Title: Chief Executive Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ | Jon W. Clark | ||
Name: Jon W. Clark | |||
Title: Chief Financial Officer |
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 29, 2016 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Gramercy Property Trust | |
Entity Central Index Key | 0001297587 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | gpt | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 421,855,117 |
Condensed Consolidated Statements of Shareholders' Equity (Deficit) and Noncontrolling Interests - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands |
Total |
Total Gramercy Property Trust [Member] |
Common Shares [Member] |
Preferred Shares [Member] |
Additional Paid-in Capital [Member] |
Accumulated Other Comprehensive Income (Loss) [Member] |
Retained Earnings/(Accumulated Deficit) [Member] |
Noncontrolling Interest [Member] |
---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2015 | 420,523,153 | 420,523,153 | ||||||
Balance at Dec. 31, 2015 | $ 2,911,077 | $ 2,911,326 | $ 4,205 | $ 84,394 | $ 3,879,932 | $ (5,751) | $ (1,051,454) | $ (249) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 27,841 | 27,980 | 27,980 | (139) | ||||
Change in net unrealized loss on derivative instruments | (33,649) | (33,649) | (33,649) | |||||
Change in net unrealized gain on debt securities | 967 | 967 | 967 | |||||
Reclassification of unrealized loss on terminated derivative instruments into earnings | 631 | 631 | 631 | |||||
Share based compensation - fair value (in shares) | 860,103 | |||||||
Share based compensation - fair value | 2,789 | 2,789 | $ 9 | 2,780 | ||||
Proceeds from stock options exercised (in shares) | 47,844 | |||||||
Proceeds from share options exercised | 167 | 167 | 167 | |||||
Conversion of OP Units to commons shares (in shares) | 265,672 | |||||||
Conversion of OP Units to common shares | 2,204 | 2,204 | $ 3 | 2,201 | ||||
Reallocation of noncontrolling interest in the operating partnership | (2,159) | (2,159) | (2,159) | |||||
Reclassification of accumulated foreign currency translation adjustments due to disposal | (3,737) | (3,737) | (3,737) | |||||
Foreign currency translation adjustment | (2,573) | (2,567) | (2,567) | (6) | ||||
Dividends on preferred shares | (3,117) | (3,117) | (3,117) | |||||
Dividends on common shares | $ (92,864) | (92,864) | (92,864) | |||||
Balance (in shares) at Jun. 30, 2016 | 421,696,772 | 421,696,772 | ||||||
Balance at Jun. 30, 2016 | $ 2,807,577 | $ 2,807,971 | $ 4,217 | $ 84,394 | $ 3,882,921 | $ (44,106) | $ (1,119,455) | $ (394) |
Business and Organization |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business and Organization | Business and Organization Gramercy Property Trust, or the Company or Gramercy, a Maryland real estate investment trust, or REIT, is a leading global investor and asset manager of commercial real estate. Gramercy specializes in acquiring and managing single-tenant, net leased industrial, office, and specialty properties. The Company focuses on income producing properties leased to high quality tenants in major markets in the United States and Europe. Gramercy earns revenues primarily through three sources: (i) rental revenues on properties that it owns in the United States, (ii) asset management revenues on properties owned by third parties in the United States and Europe and (iii) pro-rata rental revenues on its unconsolidated equity investments in the United States, Europe, and Asia. On December 17, 2015, Chambers Street Properties, or Chambers, a Maryland REIT, completed a merger, or the Merger, with Gramercy Property Trust Inc., or Legacy Gramercy, a Maryland corporation, pursuant to which Legacy Gramercy stockholders received 3.1898 common shares of beneficial interest of Chambers for each share of common stock of Legacy Gramercy held. Following the Merger, Chambers changed its name to “Gramercy Property Trust” and began trading on the New York Stock Exchange, or NYSE, using the “GPT” stock symbol. In the Merger, Chambers was the legal acquirer and Legacy Gramercy was the accounting acquirer for financial reporting purposes. Thus, the financial information set forth herein subsequent to the close of the Merger on December 17, 2015 reflects results of the combined company, and financial information prior to the close of the Merger reflects Legacy Gramercy results. For this reason, period to period comparisons may not be meaningful. Refer to Note 4 for additional information on the Merger. Unless the context requires otherwise, all references to “Company,” “Gramercy,” “we,” “our,” and “us” mean Legacy Gramercy and one or more of the Company’s subsidiaries for the period prior to the Merger closing and Gramercy Property Trust and one or more of the Company’s subsidiaries for periods following the Merger closing. As of June 30, 2016, the Company owns, either directly or in an unconsolidated equity investment, a portfolio of 327 industrial, office, and specialty properties with 98.5% occupancy. As of June 30, 2016, the Company’s asset management business, which operates under the name Gramercy Asset Management, manages for third-parties approximately $1,100,000 of commercial real estate assets, including approximately $837,000 of assets in Europe. During the three months ended June 30, 2016, the Company acquired 22 properties aggregating 3,857,982 square feet in eight separate transactions for a total purchase price of approximately $296,059. During the six months ended June 30, 2016, the Company acquired 25 properties aggregating 4,479,628 square feet in 10 separate transactions for a total purchase price of approximately $348,809. Additionally, on June 30, 2016, the Company received 100.0% ownership of seven properties previously held in its joint venture with Duke Realty Corporation through a distribution of real estate assets by the joint venture, which have an aggregate 4,189,630 square feet and total fair value of $276,100. During the three months ended June 30, 2016, the Company sold four properties aggregating 539,805 square feet for total gross proceeds of approximately $116,200. During the six months ended June 30, 2016, the Company sold 10 properties aggregating 2,634,999 square feet for total gross proceeds of approximately $647,700. Additionally, on June 30, 2016, the Company sold 74.9% of its 80.0% interest in its European joint venture with the Goodman Group to its unconsolidated equity investment in Europe, Gramercy Property Europe plc, or the Gramercy European Property Fund, for gross proceeds of $148,884 (€134,336). As of June 30, 2016, the Company’s wholly-owned portfolio of net leased properties is summarized as follows:
The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code or IRC, and generally will not be subject to U.S. federal income taxes to the extent it distributes its taxable income, if any, to its shareholders. The Company has in the past established, and may in the future establish taxable REIT subsidiaries, or TRSs, to effect various taxable transactions. Those TRSs would incur U.S. federal, state and local taxes on the taxable income from their activities. The Company’s operating partnership, GPT Operating Partnership LP, or the Operating Partnership, indirectly owns (i) all of the Company’s consolidated real estate investments, (ii) the Company’s interests in unconsolidated investments and (iii) the entities, primarily a TRS, that conduct the Company’s third-party asset management operations. The Company is the sole general partner of the Operating Partnership. In April 2016, the common units of limited partnership interest in the Legacy Gramercy’s operating partnership were exchanged for common units of limited partnership interest in GPT Operating Partnership LP, or OP Units. Additionally the Company’s partnership agreement was amended and restated to reflect the exchange, or the Fourth Amended and Restated Partnership Agreement. The Operating Partnership is the 100.0% owner of all of its direct and indirect subsidiaries, except that, as of June 30, 2016, third-party holders of limited partnership interests in the Operating Partnership owned approximately 0.27% of the beneficial interest of the Company. These interests are referred to as the noncontrolling interests in the Operating Partnership. See Note 12 for more information on the Company’s noncontrolling interests. |
Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | Significant Accounting Policies Basis of Quarterly Presentation The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, it does not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. The 2016 operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Condensed Consolidated Balance Sheet at December 31, 2015 has been derived from the audited Consolidated Financial Statements at that date. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. During the first quarter of 2016, the Company adopted ASU 2015-03, Simplifying the Presentation of Debt Issuances Costs, which requires the Company to reclassify debt financing costs, which were previously accounted for on the deferred costs line within the asset section, and present them in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability, with the exception of deferred financing costs associated with the credit facility which remain in deferred costs in the asset section on the Condensed Consolidated Balance Sheets. Deferred financing costs totaling $6,389 have been reclassified in the December 31, 2015 Condensed Consolidated Balance Sheet from the deferred costs line and netted against the corresponding debt liability. See “Recently Issued Accounting Pronouncements” below for further discussion of the new accounting guidance for deferred financing costs. Principles of Consolidation The Condensed Consolidated Financial Statements include the Company’s accounts and those of the Company’s subsidiaries which are wholly-owned or controlled by the Company, or entities which are variable interest entities, or VIEs, in which the Company is the primary beneficiary. The primary beneficiary is the party that absorbs a majority of the VIE’s anticipated losses and/or a majority of the expected returns. The Company has evaluated its investments for potential classification as variable interests by evaluating the sufficiency of each entity’s equity investment at risk to absorb losses. Entities which the Company does not control and are considered VIEs, but where the Company is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated. The equity interests of other limited partners in the Company’s Operating Partnership are reflected as noncontrolling interests. Real Estate Investments The Company records acquired real estate investments as business combinations when the real estate is occupied, at least in part, at acquisition. Costs directly related to the acquisition of such investments are expensed as incurred. The Company allocates the purchase price of real estate to land, building, improvements and intangibles, such as the value of above- and below-market leases, and origination costs associated with the in-place leases at the acquisition date. The values of the above- and below-market leases are amortized and recorded as either an increase, in the case of below-market leases, or a decrease, in the case of above-market leases, to rental revenue over the remaining term of the associated lease. The values associated with in-place leases are amortized to depreciation and amortization expense over the remaining term of the associated lease. The Company assesses the fair value of the leases at acquisition based upon estimated cash flow projections that utilize appropriate discount rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. Additionally, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase at the time of acquisition. Acquired real estate investments involving sale-leasebacks that have newly-originated leases are recorded as asset acquisitions and accordingly, transaction costs incurred in connection with the acquisition are capitalized. Acquired real estate investments which are under construction are considered build-to-suit transactions and other acquired real estate investments that do not meet the definition of a business combination are recorded at cost. In build-to-suit transactions, the Company engages a developer to construct a property or provides funds to a tenant to develop a property. The Company capitalizes the funds provided to the developer/tenant and real estate taxes, if applicable, during the construction period. Certain improvements are capitalized when they are determined to increase the useful life of the building. Depreciation is computed using the straight-line method over the shorter of the estimated useful life at acquisition of the capitalized item or 40 years for buildings, five to ten years for building equipment and fixtures, and the lesser of the useful life or the remaining lease term for tenant improvements and leasehold interests. Maintenance and repair expenditures are charged to expense as incurred. In leasing space, the Company may provide funding to the lessee through a tenant allowance. If the Company is considered the owner of the leasehold improvements constructed using a tenant allowance, the Company capitalizes the amount of the allowance and depreciates it over the shorter of the useful life of the leasehold improvements or the lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or if the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. The Company also reviews the recoverability of the property’s carrying value when circumstances indicate a possible impairment of the value of a property, expected to result from the property’s use and eventual disposition. If management determines impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded in the Condensed Consolidated Statements of Operations to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used and for assets held for sale, an impairment loss is recorded to the extent that the carrying value exceeds the fair value less estimated cost of disposal. The estimated fair value of the asset becomes its new cost basis and if the asset is to be held and used, the new cost basis will be depreciated or amortized over its remaining useful life. Intangible Assets and Liabilities The Company follows the acquisition method of accounting for business combinations. The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings and improvements on an as-if vacant basis and identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates, the value of in-place leases, and above-market and below-market ground rent intangibles. The above- and below-market lease values are amortized as a reduction of and increase to rental revenue, respectively, over the remaining non-cancelable terms of the respective leases. The value of in-place leases is amortized to depreciation and amortization expense over the remaining non-cancelable term of the respective leases. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to be material, the Company amortizes such below-market lease value into rental revenue over the renewal period. If a tenant terminates its lease prior to its contractual expiration and no future rental payments will be received, any unamortized balance of the market lease intangibles will be written off to rental revenue and any unamortized balance of the in-place lease intangibles will be written off to depreciation and amortization expense. The above- and below-market ground rent intangible values are amortized as a reduction of and increase to rent expense, respectively, over the remaining non-cancelable terms of the respective leases. If the Company terminates its lease prior to its contractual expiration and no future rent payments will be paid, any unamortized balance of the ground rent intangibles will be written off to rent expense. Intangible assets and liabilities consist of the following:
The following table provides the weighted-average amortization period as of June 30, 2016 for intangible assets and liabilities and the projected amortization expense for the next five years.
The Company recorded $29,615 and $10,142 of amortization of in-place lease intangible assets as part of depreciation and amortization for the three months ended June 30, 2016 and 2015, respectively. The Company recorded $57,175 and $18,139 of amortization of in-place lease intangible assets as part of depreciation and amortization for the six months ended June 30, 2016 and 2015, respectively. The Company recorded $5,629 and $2,105 of amortization of market lease intangible assets and liabilities as an increase to rental revenue for the three months ended June 30, 2016 and 2015, respectively. The Company recorded $5,810 and $6,050 of amortization of market lease intangible assets and liabilities as an increase to rental revenue for the six months ended June 30, 2016 and 2015, respectively. The Company recorded $8 and $0 of amortization of ground rent intangible assets and liabilities as part of other property operating expense for the three months ended June 30, 2016 and 2015, respectively. The Company recorded $17 and $(40) of amortization of ground rent intangible assets and liabilities as part of other property operating expense for the six months ended June 30, 2016 and 2015, respectively. Goodwill Goodwill represents the fair value of the collaboration expected to be achieved upon consummation of a business combination and is measured as the excess of consideration transferred over the net assets acquired at acquisition date. The Company initially recognized goodwill of $3,887 related to the acquisition of Gramercy Europe Limited, or Gramercy Europe Asset Management, however during the second quarter of 2015, as a result of finalization of the purchase price allocation for the acquisition, the Company decreased the amount allocated to goodwill by $85 and thus the final purchase price allocation to goodwill as a result of the acquisition was $3,802. The adjustment to goodwill for the finalized purchase price was primarily related to a reduction in the contract intangible value as well as an increase in the accrued income recorded for incentive fees. The carrying value of goodwill is adjusted each reporting period for the effect of foreign currency translation adjustments. The carrying value of goodwill at June 30, 2016 and December 31, 2015 was $3,223 and $3,568, respectively. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company takes a qualitative approach to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. The Company did not record any impairment on its goodwill during the six months ended June 30, 2016 or 2015. Unconsolidated Equity Investments The Company accounts for substantially all of its unconsolidated equity investments under the equity method of accounting since it exercises significant influence, but does not unilaterally control the entities, and is not considered to be the primary beneficiary. In unconsolidated equity investments, the rights of the other investors are protective and participating. Unless the Company is determined to be the primary beneficiary, these rights preclude it from consolidating the investments. The investments are recorded initially at cost as unconsolidated equity investments, as applicable, and subsequently are adjusted for equity interest in net income (loss) and cash contributions and distributions. The amount of the investments on the Condensed Consolidated Balance Sheets is evaluated for impairment at each reporting period. None of the unconsolidated equity investment debt is recourse to the Company. Transactions with unconsolidated equity method entities are eliminated to the extent of the Company’s ownership in each such entity. Accordingly, the Company’s share of net income (loss) of these equity method entities is included in consolidated net income (loss). The Company’s 5.07% unconsolidated equity investment in CBRE Strategic Partners Asia, described more in Note 5, is presented in the Condensed Consolidated Financial Statements at fair value. CBRE Strategic Partners Asia is an investment company that accounts for its investments at fair value with changes in the fair value of the investments recorded in the statement of operations. See the “Fair Value Measurements” section of this Note 2 as well as Note 9, “Fair Value Measurements,” for further discussion of the fair value accounting methodology used for CBRE Strategic Partners Asia. Carrying values of the Company’s unconsolidated equity investments were $145,252 and $580,000 at June 30, 2016 and December 31, 2015, respectively. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Restricted Cash The Company had restricted cash of $65,748 and $17,354 at June 30, 2016 and December 31, 2015, respectively, which primarily consists of proceeds from property sales held by qualified intermediaries to be used for tax-deferred, like-kind exchanges under IRC Section 1031, as well as reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage loan obligations. Variable Interest Entities During the first quarter of 2016, the Company adopted ASU 2015-02, Amendments to the Consolidation Analysis, which modified the analysis it must perform to determine whether it should consolidate certain types of legal entities. The Company’s operating partnerships, including both the GPT Operating Partnership, or the Operating Partnership, and Gramercy Operating Partnership, which is Legacy Gramercy’s operating partnership, are VIEs under the revised guidance and the Company is the primary beneficiary of each of them, because it holds majority ownership and exercises control over every aspect of the partnerships’ operations. Because the operating partnerships were already consolidated in the Company’s balance sheets, the revised guidance has no impact on the consolidated financial statements of the Company. The assets and liabilities of the Company and its operating partnerships are substantially the same, as the Company does not have any significant assets other than its investments in the operating partnerships. All of the Company's debt is also an obligation of the operating partnerships. There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption. In addition, there were no voting interest entities under prior existing guidance determined to be VIEs under the revised guidance. The Company had three consolidated VIEs as of June 30, 2016 and two consolidated VIEs as of December 31, 2015. The Company had four unconsolidated VIEs as of June 30, 2016 and December 31, 2015. The following is a summary of the Company’s involvement with VIEs as of June 30, 2016:
The following is a summary of the Company’s involvement with VIEs as of December 31, 2015:
Consolidated VIEs Proportion Foods In December 2015, the Company entered into a non-recourse financing arrangement with Big Proportion Austin LLC, or BIG, for a build-to-suit industrial property in Round Rock, Texas, or Proportion Foods. Concurrently, the Company entered into a forward purchase agreement with BIG, pursuant to which the Company will acquire the property, which is 100.0% leased to Proportion Foods, upon substantial completion of the facility’s development. The Company has determined that Proportion Foods is a VIE, as the equity holders of the entity do not have controlling financial interests and the obligation to absorb losses. The Company controls the activities that most significantly affect the economic outcome of Proportion Foods through its financing arrangement to fund the property’s development and its forward purchase agreement with BIG. As such, the Company has concluded that it is the entity’s primary beneficiary and has consolidated the VIE. The Company has a note receivable from BIG related to the financing arrangement, which is a note payable for BIG and thus eliminates upon consolidation of the VIE. The construction of the facility on the property is expected to be complete in December 2016 and the Company has committed $24,950 in financing for the construction. BIG is responsible for funding in excess of the $24,950 mortgage note. As of June 30, 2016, the Company has funded $8,926 for the property. Gramercy Europe Asset Management (European Fund Manager) In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired equity interests in the entity, hereinafter European Fund Manager, which provides investment and asset management services to the Gramercy European Property Fund. The Company has determined that European Fund Manager is a VIE, as the equity holders of that entity do not have controlling financial interests and the obligation to absorb losses. As Gramercy Europe Asset Management, through an investment advisory agreement with the VIE, controls the activities that most significantly affect the economic outcome of European Fund Manager, the Company has concluded that it is the entity’s primary beneficiary and has consolidated the VIE. European Fund Manager is expected to generate net cash inflows for the Company in the form of management fees in the future, however, if the VIE’s cash inflows are not sufficient to cover its obligations, the Company may provide financial support for the VIE. Unconsolidated VIEs Gramercy Europe Asset Management (European Fund Carry Co.) In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired equity interests in the entity, hereinafter European Fund Carry Co., entitled to receive certain preferential distributions, if any, made from time-to-time by the Gramercy European Property Fund. The Company has determined that European Fund Carry Co. is a VIE, as the equity holders of that entity do not have controlling financial interests and the obligation to absorb losses. Decisions that most significantly affect the economic performance of European Fund Carry Co. are decided by a majority vote of that VIE’s shareholders. As such, the Company does not have a controlling financial interest in the VIE and has accounted for it as an equity investment. As of June 30, 2016 and December 31, 2015, European Fund Carry Co. had net assets of $(19) and $(5). Investment in Retained CDO Bonds The Company holds non-investment grade subordinate bonds, preferred shares and ordinary shares of three collateralized debt obligations, or the Retained CDO Bonds, which it recognized subsequent to the disposal of its Gramercy Finance segment, or Gramercy Finance, and exit from the commercial real estate finance business in March 2013. The Company is not obligated to provide any financial support to these collateralized debt obligations, or CDOs. The Company’s maximum exposure to loss is limited to its interest in the Retained CDO Bonds and the Company does not control the activities that most significantly impact the VIE’s economic performance. Assets Held for Sale and Discontinued Operations As of June 30, 2016 and December 31, 2015, the Company had one and six assets classified as held for sale, respectively. One and six of the assets held for sale as of June 30, 2016 and December 31, 2015, respectively, represent Chambers properties that qualified as held for sale as of the closing date of the Merger and are included within discontinued operations, in accordance with ASC 360, as these assets acquired in the Merger do not align with the Company’s investment strategy and therefore will be sold. Real estate investments to be disposed of are reported at the lower of carrying amount or estimated fair value, less costs to sell. Once an asset is classified as held for sale, depreciation and amortization expense is no longer recorded. Refer to Note 3 for further information on the Company’s assets held for sale and discontinued operations. Tenant and Other Receivables Tenant and other receivables are derived from management fees, rental revenue and tenant reimbursements. Management fees, including incentive management fees, are recognized as earned in accordance with the terms of the management agreements. The management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services, and management of capital improvements or projects on the underlying assets. Rental revenue is recorded on a straight-line basis over the initial term of the lease. Since many leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that will only be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Tenant and other receivables also include receivables related to tenant reimbursements for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred. Tenant and other receivables are recorded net of the allowances for doubtful accounts, which as of June 30, 2016 and December 31, 2015 were $94 and $204, respectively. The Company continually reviews receivables related to rent, tenant reimbursements, and management fees, including incentive fees, and determines collectability by taking into consideration the tenant or asset management clients’ payment history, the financial condition of the tenant or asset management client, business conditions in the industry in which the tenant or asset management client operates and economic conditions in the area in which the property or asset management client is located. In the event that the collectability of a receivable is in doubt, the Company increases the allowance for doubtful accounts or records a direct write-off of the receivable. Deferred Costs Deferred costs consist of deferred financing costs, deferred acquisition costs, and deferred leasing costs. Deferred costs are presented net of accumulated amortization. The Company’s deferred financing costs are comprised of costs associated with the Company’s unsecured credit facilities and include commitment fees, issuance costs, and legal and other third-party costs associated with obtaining the related financing. Deferred financing costs are amortized on a straight-line or effective interest basis over the contractual terms of the respective agreements and the amortization is reflected as interest expense. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. During the first quarter of 2016, the Company adopted accounting guidance related to the presentation of deferred financing costs on the balance sheet and reclassified amounts from the deferred costs line pertaining to debt arrangements other than its unsecured credit facilities, that were within the asset section, to instead be netted against the corresponding debt liability for all periods presented. See “Recently Issued Accounting Pronouncements” below for further discussion of the new accounting guidance for deferred financing costs. The Company’s deferred acquisition costs consist primarily of lease inducement fees paid to secure acquisitions and are amortized on a straight-line basis over the related lease term as a reduction from rental revenue. The Company’s deferred leasing costs include direct costs, such as lease commissions, incurred to initiate and renew operating leases and are amortized on a straight-line basis over the related lease term as a reduction from rental revenue. Fair Value Measurements At June 30, 2016 and December 31, 2015, the Company measured its Retained CDO Bonds, derivative instruments, and CBRE Strategic Partners Asia on a recurring basis and measured its real estate investments classified as held for sale at Merger closing on a non-recurring basis. ASC 820-10, “Fair Value Measurements and Disclosures,” among other things, establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments and other assets and liabilities at fair value. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of these assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or an exit price. The level of pricing observability generally correlates to the degree of judgment utilized in measuring the fair value of financial instruments and other assets and liabilities. The investment manager of CBRE Strategic Partners Asia applies valuation techniques for the Company’s investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third-party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to the Company’s ownership interest therein. The three broad levels defined are as follows: Level I – This level is comprised of financial instruments and other assets and liabilities that have quoted prices that are available in liquid markets for identical assets or liabilities. Level II – This level is comprised of financial instruments and other assets and liabilities for which quoted prices are available but which are traded less frequently and instruments that are measured at fair value using management’s judgment, where the inputs into the determination of fair value can be directly observed. Level III – This level is comprised of financial instruments and other assets and liabilities that have little to no pricing observability as of the reported date. These financial instruments do not have active markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment and assumptions. For a further discussion regarding fair value measurements see Note 9, “Fair Value Measurements.” Revenue Recognition Real Estate Investments Rental revenue from leases on real estate investments is recognized on a straight-line basis over the term of the lease, regardless of when payments are contractually due. The excess of rental revenue recognized over the amounts contractually due according to the underlying leases are included in deferred revenue on the Condensed Consolidated Balance Sheets. For leases on properties that are under construction at the time of acquisition, the Company begins recognition of rental revenue upon completion of construction of the leased asset and delivery of the leased asset to the tenant. The Company’s lease agreements with tenants also generally contain provisions that require tenants to reimburse the Company for real estate taxes, insurance costs, common area maintenance costs, and other property-related expenses. Under lease arrangements in which the Company is the primary obligor for these expenses, such amounts are recognized as both revenues and operating expenses for the Company. Under lease arrangements in which the tenant pays these expenses directly, such amounts are not included in revenues or expenses. These reimbursement amounts are recognized in the period in which the related expenses are incurred. The Company recognizes sales of real estate properties only upon closing. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon closing when the collectability of the sale price is reasonably assured and the Company is not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sale of real estate. Asset Management Business The Company’s asset and property management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services, and management of capital improvements or projects on the underlying assets. The Company recognizes revenue for fees pursuant to its management agreements in the period in which they are earned. Management fees received prior to the date earned are included in deferred revenue on the Condensed Consolidated Balance Sheets. Certain of the Company’s asset management contracts include provisions that may allow it to earn additional fees, generally described as incentive fees or profit participation interests, based on the achievement of a targeted valuation of the managed assets or the achievement of a certain internal rate of return on the managed assets. The Company recognizes incentive fees on its asset management contracts based upon the amount that would be due pursuant to the contract, if the contract were terminated at the reporting date. If the contract may be terminated at will, revenue will only be recognized for the amount that would be due pursuant to that termination. If the incentive fee is a fixed amount, only a proportionate share of revenue is recognized at the reporting date, with the remaining fees recognized on a straight-line basis over the measurement period. The values of incentive management fees are periodically evaluated by management. For the three and six months ended June 30, 2016, the Company recognized incentive fees of $14,217 and $15,190, respectively. For the three months ended June 30, 2015, the Company recorded an adjustment of $(64) to incentive fees. For the six months ended June 30, 2015, the Company recognized incentive fees of $2,971. Investment and Other Income Investment income consists primarily of income accretion on the Company’s Retained CDO Bonds, which are measured at fair value on a quarterly basis using a discounted cash flow model. Other income primarily consists of interest income on servicing advances and realized foreign currency exchange gain (loss). Share-Based Compensation Plans The Company has share-based compensation plans, described more fully in Note 11. The Company accounts for share-based awards using the fair value recognition provisions. Awards of shares or restricted shares are expensed as compensation over the benefit period and may require inputs that are highly subjective and require significant management judgment and analysis to develop. The Company assumes a forfeiture rate which impacts the amount of aggregate compensation cost recognized. In accordance with the provisions of the Company’s share-based compensation plans, the Company accepts the return of shares of the Company’s common shares, at the current quoted market price to satisfy minimum statutory tax-withholding requirements related to shares that vested during the period. The Company also grants awards pursuant to its share-based compensation plans in the form of LTIP units, which are a class of limited partnership interests in the Company’s Operating Partnership. Foreign Currency Gramercy Europe Asset Management operates an asset and property management business located in the United Kingdom. The Company owns one property located in the United Kingdom, two properties in Canada, and has unconsolidated equity investments in Europe and Asia. The Company also has euro-denominated borrowings outstanding under the multi-currency portion of its revolving credit facility. Refer to Note 5 for more information on the Company’s foreign unconsolidated equity investments. Translation The Company has interests in the European Union and Canada, for which the functional currencies are the euro, the British pound sterling and the Canadian dollar. The Company performs the translation from the euro, the British pound sterling or the Canadian dollar, to the U.S. dollar for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate during the period. The Company reports the gains and losses resulting from such translation as a component of other comprehensive income (loss). The Company recorded net translation gains (losses) of $(8,686) and $(2,567) for the three and six months ended June 30, 2016, respectively. The Company recorded net translation gains (losses) of $269 and $51 for the three and six months ended June 30, 2015, respectively. These translation gains and losses are reclassified to earnings when the Company has substantially exited from all investments in the related currency. Transaction Gains or Losses A transaction gain or loss realized upon settlement of a foreign currency transaction will be included in earnings for the period in which the transaction is settled. Foreign currency intercompany transactions that are scheduled for settlement are included in the determination of net income. Intercompany foreign currency transactions of a long-term nature that do not have a planned or foreseeable future settlement date, in which the entities to the transactions are consolidated or accounted for by the equity method in the Company’s financial statements, are not included in net income but are reported as a component of other comprehensive income (loss). Net realized gains (losses) are recognized on foreign currency transactions in connection with the transfer of cash from or to foreign operations of subsidiaries or equity investments to the parent company. For the three and six months ended June 30, 2016, the Company recognized net realized foreign currency transaction gains (losses) of $(186) and $(81), respectively, on such transactions. For the three and six months ended June 30, 2015, the Company recognized net realized foreign currency transaction losses of $4 and $10, respectively, on such transactions. Derivatives and Non-Derivative Hedging Instruments In the normal course of business, the Company is exposed to the effect of interest rate and foreign exchange rate changes. The Company limits these risks by following established risk management policies and procedures including the use of derivatives and non-derivative net investment hedges. The Company uses a variety of derivative instruments that are considered “plain vanilla” derivatives to manage, or hedge, interest rate risk. The Company enters into derivative and hedging instruments that will be maximally effective in reducing the interest rate risk and foreign currency exchange rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. The Company’s derivatives and non-derivative hedging instruments typically include interest rate swaps, caps, collars and floors, foreign currency forward contracts, as well as non-derivative net investment hedges. The Company expressly prohibits the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. The Company recognizes all derivatives on the Condensed Consolidated Balance Sheets at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a hedging derivative’s change in fair value is immediately recognized in earnings. Derivative accounting may increase or decrease reported net income and shareholders’ equity prospectively, depending on future levels of the London Interbank Offered Rate, or LIBOR, swap spreads, foreign exchange rates, and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term. The Company’s non-derivative hedging instrument, the foreign currency denominated tranche of the Company’s 2015 Revolving Credit Facility, is reported at carrying value on its Condensed Consolidated Balance Sheets. As the non-derivative net investment hedge is denominated in euros, the Company translates the carrying value in euros into its functional and reporting currency of U.S. dollars at the period-ending rate and reports this value in its financial statements, with the foreign currency translation adjustment associated with the hedged net investment reported in the cumulative translation adjustment within other comprehensive income (loss). Refer to Note 10 for more information on the Company’s derivatives and non-derivative hedging instruments. Other Assets The Company makes payments for certain expenses such as insurance and property taxes in advance of the period in which it receives the benefit. These payments are classified as other assets and amortized over the respective period of benefit relating to the contractual arrangement. Other assets also includes deposits related to pending acquisitions and financing arrangements, as required by a seller or lender, respectively. Costs prepaid in connection with securing financing for a property are reclassified into deferred financing costs at the time the transaction is completed. Additionally, other assets includes costs of software purchased for internal use and as well as the value of contracts assumed by the Company pursuant to a business combination, such as asset or property management contracts. Servicing Advances Receivable The Company’s servicing advances receivable consisted of its accrual for the reimbursement of servicing advances, including expenses such as legal fees and professional fees incurred while the Company was the collateral manager of the CDOs, which were recognized as part of the disposal of Gramercy Finance in March 2013. For the three and six months ended June 30, 2016, the Company received reimbursements from servicing advances of $1,390. For the three and six months ended June 30, 2015, the Company did not receive any reimbursements. As of June 30, 2016, there were no servicing advances receivable, and as of December 31, 2015, there were servicing advances receivable of $1,382. All servicing advances were received as of March 30, 2016, thus there will be no future activity related to servicing advances. Retained CDO Bonds The Company recognized its Retained CDO Bonds at fair value in March 2013 subsequent to the disposal of Gramercy Finance. Management estimated the timing and amount of cash flows expected to be collected and recognized an investment in the Retained CDO Bonds equal to the net present value of these discounted cash flows. There is no guarantee that the Company will realize any proceeds from this investment, or what the timing will be for the expected remaining life of the Retained CDO Bonds. The Company considers these investments to be not of high credit quality and does not expect a full recovery of interest and principal. Therefore, the Company has suspended interest income accruals on these investments. On a quarterly basis, the Company evaluates the Retained CDO Bonds to determine whether significant changes in estimated cash flows or unrealized losses on these investments, if any, reflect a decline in value which is other-than-temporary. If there is a decrease in estimated cash flows and the investment is in an unrealized loss position, the Company will record an other-than-temporary impairment, or OTTI, in the Condensed Consolidated Statements of Operations. To determine the component of the OTTI related to expected credit losses, the Company compares the amortized cost basis of the Retained CDO Bonds to the present value of the revised expected cash flows, discounted using the pre-impairment yield. Conversely, if the security is in an unrealized gain position and there is a decrease or significant increase in expected cash flows, the Company will prospectively adjust the yield using the effective yield method. Refer to Note 9 for further discussion regarding the fair value measurement of the Retained CDO Bonds. For the three and six months ended June 30, 2016 and 2015, the Company recognized no OTTI on its Retained CDO Bonds. A summary of the Company’s Retained CDO Bonds as of June 30, 2016 is as follows:
The following table summarizes the activity related to credit losses on the Retained CDO Bonds for the six months ended June 30, 2016 and for the year ended December 31, 2015:
Income Taxes The Company elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code, beginning with its taxable year ended December 31, 2004. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90.0% of its ordinary taxable income, to shareholders. As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that the Company distributes to its shareholders. If the Company fails to qualify as a REIT in any taxable year, it will then be subject to U.S. federal income taxes on taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distributions to shareholders. However, the Company believes that it will be organized and will operate in such a manner as to qualify for treatment as a REIT and the Company intends to operate in the foreseeable future in such a manner so that it will qualify as a REIT for U.S. federal income tax purposes. The Company is subject to certain state and local taxes. The Company’s TRSs are subject to federal, state and local taxes. For the three and six months ended June 30, 2016, the Company recorded $2,700 and $3,403 of income tax expense, respectively. For the three and six months ended June 30, 2015, the Company recorded $17 and $1,131 of income tax expense, respectively. Tax expense for each year is comprised of federal, state, local, and foreign taxes. Income taxes, primarily related to the Company’s TRSs, are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if the Company believes it is more likely than not that all or a portion of a deferred tax asset will not be realized. Any increase or decrease in a valuation allowance is included in the tax provision when such a change occurs. The Company’s policy for interest and penalties, if any, on material uncertain tax positions recognized in the financial statements is to classify these as interest expense and operating expense, respectively. Earnings Per Share The Company presents both basic and diluted earnings per share, or EPS. Basic EPS excludes dilution and is computed by dividing net income available to vested common shareholders by the weighted average number of vested common shares outstanding during the period. The Company has adopted the two-class computation method, and thus includes all participating securities in the computation of basic shares for the periods in which the Company has net income available to vested common shares outstanding. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, as long as their inclusion would not be anti-dilutive. Refer to Note 11 for further discussion of the computation of EPS. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash investments, debt investments and accounts receivable. The Company places its cash investments in excess of insured amounts with high quality financial institutions. Concentrations of credit risk also arise when a number of the Company’s tenants or asset management clients are engaged in similar business activities or are subject to similar economic risks or conditions that could cause their inability to meet contractual obligations to the Company. The Company regularly monitors its portfolio to assess potential concentrations of credit risk. Management believes the current credit risk portfolio is reasonably well diversified. One asset management client, KBS Real Estate Investment Trust, Inc., or KBS, accounted for 95% and 93% of the Company’s management fee income for the three and six months ended June 30, 2016, respectively. KBS also accounted for 95% and 85% of the Company’s management fee income for the three and six months ended June 30, 2015, respectively. Gramercy Europe Asset Management accounted for 5% and 7% of the Company’s management fee income, including European asset management fee income, for the three and six months ended June 30, 2016, respectively. One tenant, Bank of America, N.A., accounted for 15% and 13% of the Company’s rental revenue for the three and six months ended June 30, 2016, respectively. Bank of America, N.A. also accounted for 24% and 30% of the Company’s rental revenue for the three and six months ended June 30, 2015, respectively. Additionally, for the three and six months ended June 30, 2016, there were three states, California, Florida, and Texas, that each accounted for 10% or more of the Company’s rental revenue. Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers, which creates a new Topic ASC 606, Revenue from Contracts with Customers. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires increased disclosures related to revenue recognition. Pursuant to ASU 2015-14, Revenue from Contracts with Customers, issued in August 2015, ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption only permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods therein. In April 2016, the FASB issued ASU 2016-10, and in May 2016, the FASB issued ASU 2016-11 and ASU 2016-12, which are clarification updates related to the revenue recognition guidance in ASU 2014-09 and have the same effective date and transition requirements as ASU 2014-09. The Company will appropriately adopt and apply the guidance retrospectively for its fiscal year ended December 31, 2018 and the interim periods within that year. The Company is currently evaluating the guidance to determine the impact it may have on its Condensed Consolidated Financial Statements. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. The guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this guidance during the first quarter of 2016, which did not result in changes to the Company’s conclusions regarding consolidation of applicable entities. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which serves to simplify the presentation of debt issuance costs in a company’s financial statements. The amendments in the update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability. The update is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest, which allows an entity to present the debt issuance costs from a line-of-credit arrangement as an asset. The Company adopted this guidance during the first quarter of 2016 and reclassified amounts in each period presented. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements as the update relates only to changes in financial statement presentation. See the “Reclassification” section above for further details on the adoption of this guidance. In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The update requires companies to account for the software license element of a cloud computing arrangement consistent with the acquisition of other software licenses and other licenses of intangible assets. The update is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this guidance during the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The update will be effective beginning in the first quarter of 2019 and early adoption is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The update serves to simplify the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification of awards on the statement of cash flows. The guidance in the ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted for any interim or annual period. The Company has not elected early adoption of the amendments in the updates and expects that the new guidance will not have a material impact on its Condensed Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the existing accounting guidance related to credit losses on financial instruments. The amendments in the update replace the incurred loss impairment methodology in the current accounting standards 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. The update is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting the update on its Condensed Consolidated Financial Statements. |
Dispositions, Assets Held for Sale, and Discontinued Operations |
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Dispositions, Assets Held for Sale, and Discontinued Operations | Dispositions, Assets Held for Sale, and Discontinued Operations Real Estate Dispositions During the three and six months ended June 30, 2016, the Company sold four and 10 properties, respectively. During the three and six months ended June 30, 2015, the Company sold three properties. The 10 property sales in 2016 consisted of all office properties that comprised an aggregate 2,634,999 square feet and generated gross proceeds of $647,700. The three properties sold in three and six months ended June 30, 2015 were office properties from the Company’s 67 property portfolio leased primarily to Bank of America N.A., the Bank of America Portfolio, which comprised an aggregate 85,866 square feet and generated gross proceeds of $8,619. The Company did not recognize any gains or impairments on disposals during the three and six months ended June 30, 2016. The Company recognized $350 in gains on disposals and an impairment of $149 during the three and six months ended June 30, 2015. Six of the property sales in 2016 were structured as like-kind exchanges within the meaning of Section 1031 of the IRC. As a result of the sales, the Company deposited $270,508 of the total sales proceeds into an IRC Section 1031 exchange escrow account with a qualified intermediary. The Company then used $227,521 of these funds as consideration for 21 property acquisitions during the six months ended June 30, 2016. Five of the properties sold during the six months ended June 30, 2016, which were sold for gross proceeds of $386,000, represent properties assumed in the Merger that were designated as held for sale at the time of Merger closing, and are thus included in discontinued operations for all periods presented. Five of the properties sold during the six months ended June 30, 2016, which were sold for gross proceeds of $261,700, were also assumed in the Merger and were classified as held for sale at the time of disposition, however they are not included in discontinued operations as they did not meet the definition of discontinued operations. Assets Held for Sale The Company separately classifies properties held for sale in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations. The Company had one and six assets classified as held for sale as of June 30, 2016 and December 31, 2015, respectively. In the normal course of business the Company identifies non-strategic assets for sale. Changes in the market may compel the Company to decide to classify a property held for sale or classify a property that was designated as held for sale back to held for investment. During the three and six months ended June 30, 2016 and 2015, the Company did not reclassify any properties previously identified as held for sale to held for investment. The following table summarizes the assets held for sale and liabilities related to the assets held for sale as of June 30, 2016 and December 31, 2015:
Discontinued Operations The following operating results for Gramercy Finance, the assets previously sold and the assets that were assumed in the Merger and simultaneously designated as held for sale for the three and six months ended June 30, 2016 and 2015 are included in discontinued operations for all periods presented:
Discontinued operations have not been segregated in the Condensed Consolidated Statements of Cash Flows. The table below presents additional relevant information pertaining to results of discontinued operations for the six months ended June 30, 2016 and 2015, including depreciation, amortization, capital expenditures, and significant operating and investing noncash items:
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Real Estate Investments |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments | Real Estate Investments Property Acquisitions During the six months ended June 30, 2016, the Company’s property acquisitions are summarized as follows:
During the year ended December 31, 2015, the Company’s property acquisitions are summarized as follows:
The Company recorded revenues and net loss for the three months ended June 30, 2016 of $3,671 and $(259), respectively, related to its real estate acquisitions during the period. The Company recorded revenues and net income for the six months ended June 30, 2016 of $5,698 and $1,089, respectively, related to its acquisitions during the period. The Company recorded revenues and net income for the three months ended June 30, 2015 of $2,149 and $917, respectively, related to its real estate acquisitions during the period. The Company recorded revenues and net income for the six months ended June 30, 2015 of $17,731 and $1,985, respectively, related to its acquisitions during the period. Property Purchase Price Allocations The Company is currently analyzing the fair value of the lease and real estate assets of one and 23 of its property investments acquired in 2015 and 2016, respectively, and accordingly, the purchase price allocations for these properties are preliminary and subject to change. The initial recording of the assets is summarized as follows:
During the six months ended June 30, 2016 and the year ended December 31, 2015, the Company finalized the purchase price allocations for 20 and 136 properties acquired in prior periods, respectively, for which the Company had recorded preliminary purchase price allocations at the time of acquisition. The aggregate changes from the preliminary purchase price allocations to the finalized purchase price allocations, in accordance with ASU 2015-16, which the Company adopted in the third quarter of 2015, are shown in the table below:
Pro Forma The following table summarizes, on an unaudited pro forma basis, the Company’s combined results of operations for the three and six months ended June 30, 2016 and 2015 as though the acquisitions closed during the three and six months ended June 30, 2016 and 2015 were completed on January 1, 2015. The supplemental pro forma operating data is not necessarily indicative of what the actual results of operations would have been assuming the transaction had been completed as set forth above, nor do they purport to represent the Company’s results of operations for future periods. The table includes pro forma operating results for the assets acquired in the Merger.
Merger with Chambers As described in Note 1, on December 17, 2015, the Company completed a merger transaction in which Legacy Gramercy merged with and into a subsidiary of Chambers. In accordance with ASC 805, Business Combinations, the Merger was accounted for as a reverse acquisition, with Chambers as the legal acquirer and Legacy Gramercy as the accounting acquirer for financial reporting purposes. At Merger closing, each share of Legacy Gramercy common stock, par value $0.001 per share, that was issued and outstanding immediately prior to the effective time of the Merger, was canceled and converted into the right to receive 3.1898 common shares, par value $0.01 per share, of the Company. Because the Merger is accounted for as a reverse acquisition, consideration for the Merger is computed as if Legacy Gramercy had issued its equity interests to Chambers shareholders. Consideration for the Merger was $1,829,241, based on Legacy Gramercy’s closing stock price of $24.63 on December 17, 2015, the number of Chambers common shares outstanding at the close of the Merger, and the Merger Agreement exchange ratio of 3.1898 set forth in the Agreement and Plan of Merger, dated as of July 1, 2015, related to the Merger, or the Merger Agreement. The Company is in the process of completing the allocation of the purchase price for the Merger, which the Company expects to finalize later this year. The following table summarizes the preliminary purchase price allocation, which represents the current best estimate of acquisition date fair values of the assets acquired and liabilities assumed:
The final allocation of the purchase price will be based on the Company’s assessment of the fair value of the acquired assets and liabilities and may differ significantly from the estimated preliminary allocation. During the six months ended June 30, 2016, the Company recorded adjustments to the preliminary purchase price allocation for Chambers as a result of further evaluation of the fair value of the assets acquired and liabilities assumed. The adjustments recorded resulted in a decrease to the allocation to assets acquired by $2,095 and a decrease to the allocation to liabilities assumed by $2,095. The preliminary purchase price allocation adjustments also resulted in an increase in net income of $1,666 and $1,673 to record adjustments to depreciation and amortization expense related to the adjustments on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016, respectively. Acquisition of Gramercy Europe Asset Management On December 19, 2014, the Company acquired ThreadGreen Europe Limited, a United Kingdom based property and asset management platform, which the Company subsequently renamed Gramercy Europe Limited, or Gramercy Europe Asset Management, for $3,755 and the issuance of 96,535 shares of the Company’s common stock, valued at $652 as of the date of closing. The Company accounted for the acquisition utilizing the acquisition method of accounting for business combinations. The Company initially recognized assets of $902, liabilities of $398, and goodwill of $3,887, as well as a $16 realized foreign currency transaction loss related to the acquisition and during the second quarter of 2015, the Company finalized the purchase price allocation, which resulted in an increase to the allocation to assets by $190, an increase to the allocation to liabilities by $105, a decrease to goodwill by $85, and a decrease to net income of $80 to record adjustments to amortization and incentive fees. The final allocation of the purchase price included assets of $1,092, liabilities of $503, and goodwill of $3,802. Goodwill represents the fair value of the collaboration expected to be achieved upon consummation of a business combination and is measured as the excess of consideration transferred over the net assets acquired at acquisition date. For more information on Gramercy Europe Asset Management, refer to Note 5. |
Unconsolidated Equity Investments |
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Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unconsolidated Equity Investments | Unconsolidated Equity Investments The Company has investments in a variety of ventures. The Company will co-invest in entities that own multiple properties with various investors or with one partner. The Company may manage the ventures and collect asset and property management fees as well as incentive fees, otherwise known as profit participation, from its investment partners, or one of the other partners will manage the ventures for asset and property management fees as well as incentive fees. Depending on the structure of the venture, the Company’s voting interest may be different than its economic interest. As the Company does not control these ventures, the Company accounts for these investments under the equity method of accounting. As a result of the Merger, the Company acquired an interest in four unconsolidated entities, the Duke JV, Goodman Europe JV, Goodman UK JV, and the CBRE Strategic Partners Asia, a real estate investment fund. The Company’s equity investment in the entities was fair valued on the Merger closing date, and the difference between the historical carrying value of the net assets and the fair value has been recorded as a basis difference. The basis difference will be amortized to equity in net income from joint ventures and equity investments over the remaining weighted-average useful life of the underlying assets of each entity. As of June 30, 2016 and December 31, 2015, the Company owned properties through unconsolidated equity investments and had investment interests in these unconsolidated entities as follows:
The following is a summary of the Company’s unconsolidated equity investments for the six months ended June 30, 2016:
Gramercy European Property Fund In December 2014, the Company, along with several equity investment partners, formed the Gramercy European Property Fund, a private real estate investment fund, which targets single-tenant industrial, office and specialty retail assets throughout Europe. Since inception, the equity investors, including the Company, have collectively committed and funded $395,213 (€352,500) in equity capital to the Gramercy European Property Fund. As of June 30, 2016, the commitments of all equity investors to the Gramercy European Property Fund, including the Company, have been fully funded. On May 31, 2016, the Gramercy European Property Fund acquired the Goodman Group’s 20.0% interest in the Goodman Europe JV for a total purchase price of $47,633 (€42,766). On June 30, 2016, the Gramercy European Property Fund acquired 74.9% of the Company’s 80.0% interest in the Goodman Europe JV for a total purchase price of $148,884 (€134,336). As of June 30, 2016, the Gramercy European Property Fund owns 94.9% of the Goodman Europe JV, which holds nine properties located in Germany and France. As of June 30, 2016 and December 31, 2015, the Company contributed $55,892 (€50,000) and $25,663 (€23,160) to the Gramercy European Property Fund, respectively. During the six months ended June 30, 2016 and the year ended December 31, 2015, the Gramercy European Property Fund acquired nine and 12 properties, respectively, located in Germany, the Netherlands, Poland, and the United Kingdom. Refer to Note 8 for additional information on the equity transactions related to the Gramercy European Property Fund and the Goodman Europe JV. Philips JV The Philips JV is a fee interest in 200 Franklin Square Drive, a 199,900 square foot building located in Somerset, New Jersey which is 100.0% net leased to Philips Holdings, USA Inc., a wholly-owned subsidiary of Royal Philips Electronics through December 2021. The property is financed by a $40,364 fixed rate mortgage loan with maturity in September 2035. The loan had an anticipated repayment date in September 2015 and, as such, excess cash flow at the property began paying down the loan in September 2015. During the three and six months ended June 30, 2016, the Company did not receive any distributions from the joint venture. During the three and six months ended June, 30, 2015 the Company received distributions of $103 and $206, respectively, from the joint venture. Duke JV The Duke JV invested in industrial and office properties located throughout the United States. The Company’s investment partner, Duke Realty Corporation, or Duke, acted as the managing member of the Duke JV, was entitled to receive fees in connection with the services it provides to the Duke JV, including asset management, construction, development, leasing and property management services, and was entitled to a promoted interest in the Duke JV. The Company had joint approval rights with Duke over all major policy decisions. In June 2016, the Company and Duke entered into a Dissolution and Liquidation Agreement, or the Dissolution Agreement. On June 30, 2016, pursuant to the Dissolution Agreement, the Duke JV distributed seven of its properties to the Company and one of its properties and $2,760 to Duke. As a result of the distributions, the Company recorded a gain of $7,229 for the three and six months ended June 30, 2016. As of June 30, 2016, the Duke JV had one property, which was sold in July 2016 and as a result of this sale, the Company received a final distribution of $41,060 from the Duke JV. During the three and six months ended June 30, 2016, the Company received cash distributions of $0 and $53,807 from the Duke JV. Goodman JV The Goodman UK JV invests in industrial properties in the United Kingdom and the Goodman Europe JV invests in industrial properties in France and Germany. As noted above, during the second quarter of 2016, the Gramercy European Property Fund acquired the Goodman Group’s 20.0% interest in the Goodman Europe JV and acquired 74.9% of the Company’s 80.0% interest in the Goodman Europe JV. As of June 30, 2016, the Company has a 5.1% direct interest in the Goodman Europe JV as well as an indirect interest in the remaining 94.9% interest that is held through the Company’s 14.2% interest in the Gramercy European Property Fund. Pursuant to the Goodman UK JV shareholder agreement, if a deadlock arises pertaining to a major decision regarding a specific property, either shareholder may exercise a buy-sell option in relation to the relevant property for the Goodman UK JV. Additionally, after the initial investment period, either shareholder wishing to exit the Goodman UK JV may exercise a buy-sell option with respect to its entire interest. The Goodman UK JV pays certain fees to certain Goodman Group subsidiaries in connection with the services they provide to the Goodman UK JV, including but not limited to investment advisory, development management and property management services. The Goodman Group is also entitled to a promoted interest in the Goodman UK JV. As a result of the Gramercy European Property Fund’s acquisition of the Goodman Group’s 20.0% interest in the Goodman Europe JV, the Goodman Europe JV shareholder agreement, which previously had the same terms as that of the Goodman UK JV, was amended. In the amended Goodman Europe JV shareholder agreement, control is shared among joint venture partners based on ownership interest. Following the sale transaction, the Company has a cumulative continuing 5.1% interest in the Goodman Europe JV, through its direct 5.1% ownership interest in addition to its indirect ownership interest of 14.2% in the Gramercy European Property Fund which owns 94.9% of the Goodman Europe JV. Due to its continuing equity interest, the Company maintains significant influence in the Goodman Europe JV, and as a result of both of these factors, the Company continues to account for its outstanding interest in the joint venture using the equity method. Pursuant to the amended Goodman Europe JV shareholder agreement, the Goodman Europe JV pays accounting and property management fees to certain Goodman Group subsidiaries and pays investment advisory and other management-related fees to the Gramercy European Property Fund in connection with the services these entities provide to the Goodman Europe JV. During the three months and six months ended June 30, 2016, the Company received distributions of $3,814 and $7,375, respectively, from the Goodman Europe JV. During the three and six months ended June 30, 2016, the Company did not receive any distributions from the Goodman UK JV. CBRE Strategic Partners Asia CBRE Strategic Partners Asia is a real estate investment fund with investments in China. CBRE Strategic Partners Asia had an eight-year original term, which began on January 31, 2008 and may be extended for up to two one-year periods with the approval of two-thirds of the limited partners. CBRE Strategic Partners Asia’s commitment period has ended; however, it may call capital to fund operations, obligations and liabilities. For the three and six months ended June 30, 2016, the Company has not committed any capital nor received any distributions. In March 2016, the limited partners approved a one-year extension of the fund’s life. CBRE Strategic Partners Asia is managed by CBRE Investors SP Asia II, LLC, an affiliate of CBRE Global Investors. CBRE Strategic Partners Asia is not obligated to redeem the interests of any of its investors, including of the Company, prior to 2017. Except in certain limited circumstances such as transfers to affiliates, successor trustees or state agencies, the Company will not be permitted to sell its interest in CBRE Strategic Partners Asia without the prior written consent of the general partner, which the general partner may withhold in its sole discretion. Morristown JV On October 8, 2015, the Company contributed 50.0% of its interest in an office property located in Morristown, New Jersey to a joint venture the Company formed with 21 South Street, a subsidiary of Hampshire Partners Fund VIII LP. In connection with the contribution, the Company entered into a joint venture agreement for a 50.0% equity interest in the property with 21 South Street, or the Morristown JV. The Company sold the remaining 50.0% equity interest of the property to 21 South Street for gross proceeds of $2,600. In October 2015, the Morristown JV entered into a leasing and construction management agreement with Prism Construction Management, LLC to manage the construction of specific improvements at the property. The Condensed Consolidated Balance Sheets for the Company’s unconsolidated equity investments at June 30, 2016 are as follows:
The Condensed Consolidated Balance Sheets for the Company’s unconsolidated equity investments at December 31, 2015 are as follows:
Certain real estate assets in the Company’s unconsolidated equity investments are subject to mortgage loans. The following is a summary of the secured financing arrangements within the Company’s unconsolidated equity investments as of June 30, 2016:
The statements of operations for the unconsolidated equity investments for the three months ended June 30, 2016 and 2015 or partial period for acquisitions or dispositions which closed during these periods, are as follows:
The Condensed Consolidated Statements of Operations for the unconsolidated equity investments for the six months ended June 30, 2016 and 2015 or partial period for acquisitions or dispositions which closed during these periods, are as follows:
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Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | Debt Obligations Secured Debt Mortgage Loans Certain of the Company’s real estate assets are subject to mortgage loans. During the six months ended June 30, 2016, the Company assumed non-recourse mortgages of $45,958 in connection with 11 real estate acquisitions, $12,931 associated with two properties distributed to the Company from the Duke JV, and entered into a $9,550 mortgage on a prior-period real estate acquisition. During the year ended December 31, 2015, the Company assumed $618,169 of non-recourse mortgages in connection with 42 real estate acquisitions, of which $464,292 related to mortgages on 29 properties acquired in connection with the Merger. During the three months ended June 30, 2016, the Company paid off the debt on two properties encumbered by mortgage loans and during the six months ended June 30, 2016, the Company paid off the debt on eight properties encumbered by mortgage loans and transferred one property encumbered by a mortgage loan. As a result of the loan payoffs and transfer, for the three and six months ended June 30, 2016, the Company recorded net losses on early extinguishment of debt of $(1,356) and $(7,113), including net gains on extinguishment of debt of $0 and $1,930 within discontinued operations, respectively, related to unamortized deferred financing costs and mortgage premiums and discounts that were immediately expensed upon termination as well as early termination fees incurred for the extinguishments. The Company did not pay off any mortgage loans during the three and six months ended June 30, 2015. The Company’s mortgage loans include a series of financial and other covenants that the Company has to comply with in order to borrow under them. The Company was in compliance with the covenants under the mortgage loan facilities as of June 30, 2016. The following is a summary of the Company’s secured financing arrangements as of June 30, 2016:
Unsecured Debt 2015 Credit Facility and Term Loans In December 2015, the Company entered into an agreement, or the Credit Agreement, for a new $1,900,000 credit facility, or the 2015 Credit Facility, consisting of an $850,000 senior unsecured revolving credit facility, or the 2015 Revolving Credit Facility, and $1,050,000 term loan facility, or the 2015 Term Loan, with JPMorgan Securities LLC and Merrill Lynch, Pierce, Fenner and Smith Incorporated, and terminated Legacy Gramercy’s 2014 Credit Facility. The 2015 Revolving Credit Facility, consists of a $750,000 U.S. dollar revolving credit facility and a $100,000 multicurrency revolving credit facility. The 2015 Revolving Credit Facility matures in January 2020, but may be extended for two additional six-month periods upon the payment of applicable fees and satisfaction of certain customary conditions. Borrowings under the multicurrency loan denominated in euros are designated as a non-derivative net investment hedge to mitigate the risk from fluctuations in foreign currency exchange rates. Refer to Note 10, “Derivatives and Non-Derivative Hedging Instruments,” for further information on the hedge. The 2015 Term Loan consists of a $300,000 term loan facility that matures in January 2019 with one 12-month extension option, or the 3-Year Term Loan, and a $750,000 term loan facility that matures in January 2021, or the 5-Year Term Loan. Outstanding borrowings under the 2015 Revolving Credit Facility incur interest at a floating rate based upon, at the Company’s option, either (i) adjusted LIBOR plus an applicable margin ranging from 0.875% to 1.55%, depending on the Company’s credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.55%, depending on the Company’s credit ratings. The Company is also required to pay quarterly in arrears a 0.125% to 0.30% facility fee, depending on the Company’s credit ratings, on the total commitments under the 2015 Revolving Credit Facility. Outstanding borrowings under the 2015 Term Loan incur interest at a floating rate based upon, at the Company’s option, either (i) adjusted LIBOR plus an applicable margin ranging from 0.90% to 1.75%, depending on the Company’s credit ratings, or (ii) the alternate base rate plus an applicable margin ranging from 0.00% to 0.75%, depending on the Company’s credit ratings. The alternate base rate is the greater of (x) the prime rate announced by JPMorgan Chase Bank, N.A., (y) 0.50% above the Federal Funds Effective Rate and (z) the adjusted LIBOR for a one-month interest period plus 1.00%. In December 2015, the Company also entered into a new $175,000 seven-year unsecured term loan with Capital One, N.A., or the 7-Year Term Loan, which matures in January 2023. Outstanding borrowings under the 7-Year Term Loan incur interest at a floating rate based upon, at the Company’s option, either (i) adjusted LIBOR plus an applicable margin ranging from 1.30% to 2.10%, depending on the Company’s credit ratings, or (iii) the alternate base rate plus an applicable margin ranging from 0.30% to 1.10%, depending on the Company’s credit ratings. The alternate base rate is the greatest of (x) the prime rate announced by Capital One, N.A., (y) 0.50% above the Federal Funds Effective Rate and (z) the adjusted LIBOR for a one-month interest period plus 1.00%. During the six months ended June 30, 2016, the Company amended its 5-Year Term Loan and its 7-Year Term Loan in order to remove the 0.00% rate floor on the applicable LIBOR that existed in the original loan agreements. These unsecured borrowing facilities include a series of financial and other covenants that the Company has to comply with in order to borrow under the facilities. The Company was in compliance with the covenants under the facilities as of June 30, 2016. During the first quarter of 2016, the Company adopted accounting guidance related to the presentation of deferred financing costs on the balance sheet and reclassified amounts from the deferred costs line to net against the liability for all periods presented. Deferred financing costs associated with the Company’s credit facility remain in deferred costs on the Condensed Consolidated Balance Sheets. See Note 2, “Significant Accounting Policies,” for further information. The terms of the Company’s unsecured revolving credit facility and term loans, as well as outstanding balances as of June 30, 2016 and December 31, 2015, are set forth in the table below:
Senior Unsecured Notes On December 17, 2015, the Company issued and sold $100,000 aggregate principal amount of senior unsecured notes, or the Senior Unsecured Notes, and on January 12, 2016, the Company issued and sold an additional $50,000 aggregate principal amount of the Senior Unsecured Notes in private placements. The Senior Unsecured Notes are guaranteed by the Company and bear interest at a rate of 4.97% per annum, with interest payable in arrears on June 17 and December 17 of each year until maturity. Payments commenced on June 17, 2016. Exchangeable Senior Notes On March 18, 2014, the Company issued $115,000 of 3.75% exchangeable senior notes, or the Exchangeable Senior Notes. The Exchangeable Senior Notes are senior unsecured obligations of the Company’s operating partnerships and are guaranteed by the Company on a senior unsecured basis. The Exchangeable Senior Notes mature on March 15, 2019, unless redeemed, repurchased or exchanged in accordance with their terms prior to such date and will be exchangeable, under certain circumstances, for cash, for common shares or for a combination of cash and common shares, at the election of the Company’s operating partnerships. The Exchangeable Senior Notes will also be exchangeable prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date, at any time beginning on December 15, 2018, and also upon the occurrence of certain events. On or after March 20, 2017, in certain circumstances, the Company’s operating partnership may redeem all or part of the Exchangeable Senior Notes for cash at a price equal to 100.0% of the principal amount of the Exchangeable Senior Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. As of June 30, 2016, the Exchangeable Senior Notes have a current exchange rate of 41.5897 Units of Merger Consideration, or approximately 132.6628 of the Company’s common shares for each $1.0 principal amount of the Exchangeable Senior Notes, representing an exchange price of $7.54 per share of the Company’s common shares. The fair value of the Exchangeable Senior Notes was determined at issuance to be $106,689. The discount is being amortized to interest expense over the expected life of the Exchangeable Senior Notes. As of June 30, 2016 and December 31, 2015, the Exchangeable Senior Notes were recorded as a liability at carrying value of $107,550 and $106,581, respectively, net of unamortized discount and deferred financing costs of $7,450 and $8,419, respectively. The fair value of the embedded exchange option of the Exchangeable Senior Notes was recorded in additional paid-in-capital within shareholders’ equity of $11,726 as of June 30, 2016 and December 31, 2015. Combined aggregate principal maturities of the Company’s unsecured debt obligations, non-recourse mortgages, and Exchangeable Senior Notes, in addition to associated interest payments, as of June 30, 2016 are as follows:
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Leasing Agreements |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||
Leases, Operating [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Leasing Agreements | Leasing Agreements The Company’s properties are leased to tenants under operating leases with expiration dates extending through the year 2035. These leases generally contain rent increases and renewal options. Future minimum rental revenues under non-cancelable leases excluding reimbursements for operating expenses as of June 30, 2016 are as follows:
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Transactions with Trustee Related Entities and Related Parties |
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Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Transactions with Trustee Related Entities and Related Parties | Transactions with Trustee Related Entities and Related Parties On June 30, 2016, the Company entered into an agreement to sell 74.9% of its outstanding 80.0% interest in the Goodman Europe JV to the Gramercy European Property Fund, in which the Company has a 14.2% as of June 30, 2016, has committed and funded total capital of $55,892 (€50,000), and for which the Company’s CEO is on the board of directors and also has capital commitments, as noted below. The Company sold 74.9% of its interest in the Goodman Europe JV to the Gramercy European Property Fund for gross proceeds of $148,884 (€134,336). The Company’s sale of 74.9% of its interest in the Goodman Europe JV resulted in the Company recording a gain of $5,341 primarily related to depreciation and amortization recorded since Merger closing date. This gain amount is recorded as a gain on sale of unconsolidated equity investment interests held with a related party on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016. Following the sale transaction, the Company has a cumulative continuing 5.1% interest in the Goodman Europe JV. The transaction was entered into in order to achieve efficiencies from the combination of the two European platforms. The Company’s CEO, Gordon F. DuGan, is on the board of directors of the Gramercy European Property Fund and has invested approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund. The two Managing Directors of Gramercy Europe Asset Management have collectively invested approximately $1,388 (€1,250) in capital to the Gramercy European Property Fund. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the closing date for completed transactions and (ii) the exchange rate that prevailed on June 30, 2016, in the case of unfunded commitments. One of the properties acquired in December 2015 as part of the Merger was partially leased to Duke Realty, the Company’s partner in the Duke JV. Duke Realty acts as the managing member of the Duke JV and provides asset management, construction, development, leasing and property management services, for which it is entitled to receive fees as well as a promoted interest. From the Merger date through lease expiration in May 2016, Duke Realty leased 30,777 square feet of one of the Company’s office properties located in Minnesota which had an aggregate 324,296 rentable square feet. Duke Realty paid the Company $156 and $333 under the lease for the three and six months ended June 30, 2016, respectively. See Note 5 for more information on the Company’s transactions with the Duke JV. The Company acquired three properties in January 2015 in an arms-length transaction from affiliates of KTR Capital Partners, a private industrial real estate investment company, for which one of the Company’s trustees, Jeffrey Kelter, served as Chief Executive Officer and Chairman of the Board. The properties are located in Milwaukee, Wisconsin, comprise an aggregate 450,000 square feet and were acquired for an aggregate purchase price of approximately $19,750. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company discloses fair value information, whether or not recognized in the financial statements, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows based upon market yields or by using other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments and other assets and liabilities measured at fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on estimated fair value amounts. The following table presents the carrying value in the financial statements and approximate fair value of assets and liabilities measured on a recurring and non-recurring basis at June 30, 2016 and December 31, 2015:
The following methods and assumptions were used to estimate the fair value of each class of assets and liabilities for which it is practicable to estimate the value: Cash and cash equivalents, accrued interest, and accounts payable: These balances in the Condensed Consolidated Financial Statements reasonably approximate their fair values due to the short maturities of these items. Retained CDO Bonds: Non-investment grade, subordinate CDO bonds, preferred shares and ordinary shares are presented on the Condensed Consolidated Financial Statements at fair value. The fair value is determined by an internally developed discounted cash flow model. Refer to Note 2 for more information on these instruments. Interest rate swaps: The Company’s interest rate swap agreements are carried at fair value in the Condensed Consolidated Financial Statements based upon third-party valuations. Refer to Note 10 for more information on these derivative instruments. Forward currency forward contract: The Company’s forward currency forward contract is carried at fair value in the Condensed Consolidated Financial Statements based upon third-party valuations, which utilize quoted market prices of the same or similar instruments, adjusted for counterparty risk. Refer to Note 10 for more information on these derivative instruments. Mortgage notes payable, unsecured term loans, unsecured revolving credit facilities and senior unsecured notes: These instruments are presented in the Condensed Consolidated Financial Statements at amortized cost and not at fair value. The fair value of each instrument is estimated by a discounted cash flows model, using discount rates that best reflect current market rates for financings with similar characteristics and credit quality. Mortgage premiums and discounts are amortized to interest expense on the Condensed Consolidated Statements of Operations using the effective interest method over the terms of the related notes. Refer to Note 6 for more information on these instruments. Exchangeable Senior Notes: The Exchangeable Senior Notes are presented at amortized cost on the Condensed Consolidated Financial Statements. The fair value is determined based upon a discounted cash-flow methodology using discount rates that best reflect current market rates for instruments with similar with characteristics and credit quality. Refer to Note 6 for more information on these instruments. CBRE Strategic Partners Asia: The Company’s unconsolidated equity investment, CBRE Strategic Partners Asia, is presented in the Condensed Consolidated Financial Statements at fair value. The investment manager of CBRE Strategic Partners Asia applies valuation techniques for the Company’s investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third-party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to the Company’s ownership interest therein. Refer to Note 2 and Note 5 for more information on these instruments. Real estate investments designated as held for sale at Merger closing: The Company designated six properties as held for sale at the closing of the Merger on December 17, 2015. There was one property in this classification as of June 30, 2016 and six properties as of December 31, 2015. These properties are reported at estimated fair value, less costs to sell and are included in discontinued operations. Refer to Note 2 and Note 3 for more information on these instruments. Disclosure about fair value measurements is based on pertinent information available to the Company at the reporting date. Although the Company is not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for the purpose of these financial statements since June 30, 2016 and December 31, 2015, and current estimates of fair value may differ significantly from the amounts presented herein. The following discussion of fair value was determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of the assets or liabilities. Determining which category an asset or liability falls within the hierarchy requires significant judgment and the Company evaluates its hierarchy disclosures each quarter. Assets and liabilities measured at fair value on a recurring basis and on a non-recurring basis are categorized in the table below based upon the lowest level of significant input to the valuations.
Valuation of Level III Instruments Derivative instruments: Interest rate swaps are valued with the assistance of a third-party derivative specialist, who uses a combination of observable market-based inputs, such as interest rate curves, and unobservable inputs which require significant judgment such as the credit valuation adjustments due to the risk of non-performance by both the Company and its counterparties. The most significant unobservable input in the fair valuation of derivative instruments is the credit valuation adjustment as it requires significant management judgment regarding changes in the credit risk of the Company or its counterparties, however the primary driver of the fair value of the interest rate swaps is the forward interest rate curve. Fair values of the Company’s derivative instruments were valued using a Black-Scholes model. Fair value of the Company’s embedded exchange option was determined using a probabilistic valuation model with the assistance of third-party valuation specialists. Total unrealized gains (losses) from derivatives for the three and six months ended June 30, 2016 were $(11,460) and $(33,649), respectively, in accumulated other comprehensive income (loss). Total unrealized gains (losses) from derivatives for the three and six months ended June 30, 2015 were $1,468 and $(664), respectively, in accumulated other comprehensive income (loss). Retained CDO Bonds: Retained CDO Bonds are valued on a recurring basis using an internally developed discounted cash flow model. Management estimates the timing and amount of cash flows expected to be collected and applies a discount rate equal to the yield that the Company would expect to pay for similar securities with similar risks at the valuation date. Future expected cash flows generated by management require significant assumptions and judgment regarding the expected resolution of the underlying collateral, which includes loans and other lending investments, real estate investments, and collateralized mortgage backed securities. The resolution of the underlying collateral requires further management assumptions regarding capitalization rates, lease-up periods, future occupancy rates, market rental rates, holding periods, capital improvements, net property operating income, timing of workouts and recoveries, loan loss severities and other factors. The models are most sensitive to the unobservable inputs such as the timing of a loan default or property sale and the severity of loan losses. Significant increases (decreases) in any of those inputs in isolation as well as any change in the expected timing of those inputs would result in a significantly lower (higher) fair value measurement. Due to the inherent uncertainty in the determination of fair value, the Company has designated its Retained CDO Bonds as Level III. Investment in CBRE Strategic Partners Asia: The Company’s investment in CBRE Strategic Partners Asia is based on the Level III valuation inputs applied by the investment manager of CBRE Strategic Partners Asia, utilizing a mix of different approaches for valuing the underlying real estate related investments within the investment company. The approaches include the income approach, direct market comparison approach and the replacement cost approach for newer properties. For investments owned more than one year, except for investments under construction or incurring significant renovation, CBRE Strategic Partners Asia obtains a third-party appraisal. For investments in real estate under construction or incurring significant renovation, the valuation analysis is prepared by the investment manager of CBRE Strategic Partners Asia. The valuations are most sensitive to the unobservable inputs of discount rates, as well as capitalization rates an expected future cash flows, and significant increases (decreases) in these inputs would result in a significantly lower (higher) fair value measurement. On a quarterly basis, the Company obtains the financial results of CBRE Strategic Partners Asia and on an annual basis the Company receives audited financial statements. Real estate investments classified as held for sale at Merger closing: Real estate investments classified as held for sale at the time of the Merger are reported at estimated fair value, less costs to sell. The fair value of real estate investments and their related lease intangibles is determined by an independent valuation firm using valuation techniques including the market approach, income approach, and cost approach. Key assumptions in the valuations, to which the fair value determinations are most sensitive, include discount and capitalization rates as well as expected future cash flows. Significant increases (decreases) in these inputs would result in a significantly lower (higher) fair value measurement. As the inputs are unobservable, the Company determined the inputs used to value this liability falls within Level III for fair value reporting. Fair Value on a Recurring Basis Quantitative information regarding the valuation techniques and the range of significant unobservable Level III inputs used to determine fair value measurements on a recurring basis as of June 30, 2016 are:
The following roll forward table reconciles the beginning and ending balances of financial assets measured at fair value on a recurring basis using Level III inputs:
The following roll forward table reconciles the beginning and ending balances of financial liabilities measured at fair value on a recurring basis using Level III inputs:
(1) The Company’s foreign currency forward contract is not included as it is classified as a Level II investment. Fair Value on a Non-Recurring Basis The Company measured its real estate investments classified as held for sale at the time of the Merger on a non-recurring basis as of June 30, 2016 and December 31, 2015. The Company had one and six assets in this classification as of June 30, 2016 and December 31, 2015, respectively, as the Company sold five of the assets during the six months ended June 30, 2016. These assets were recorded at fair value, less costs to sell of $9,752 and $393,984 as of June 30, 2016 and December 31, 2015, respectively, and are included in discontinued operations. Refer to Note 3 for further information on these assets. |
Derivatives and Non-Derivative Hedging Instruments |
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Derivative Instrument Detail [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Non-Derivative Hedging Instruments | Derivatives and Non-Derivative Hedging Instruments In June 2016, the Company entered into a foreign currency forward contract to mitigate its exposure to foreign currency exchange rate movements in the euro, specifically in relation to funds received on its sale of 74.9% of its 80.0% interest in the Goodman Europe JV in June 2016. The foreign currency forward is a derivative contract, through which the Company is committed to deliver a certain amount of currency at a set price on a specific date in the future, or the settlement date. The forward contract locked in the Company’s future currency exchange rate for the term of the contract, thus minimizing the Company’s exposure to rate fluctuations during this period. The contract is not designated as a hedging instrument. As of June 30, 2016, the Company’s derivative instruments consist of interest rate swaps, which are cash flow hedges, and a foreign currency forward contract, which is not designated as a hedging instrument. Changes in the effective portion of fair value of derivatives designated as hedging instruments are recognized in other comprehensive income (loss) until the hedged item expires or is recognized in earnings. The ineffective portion of a hedging derivative’s change in fair value and the change in value of a non-hedging derivative instrument are immediately recognized in earnings. Changes in the fair value of the Company’s foreign currency forward contract are recognized in other income on the Company’s Condensed Consolidated Statements of Operations. Derivative accounting may increase or decrease reported net income and shareholders’ equity, depending on future levels of LIBOR interest rates, foreign exchange rates, and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term. Borrowings on the Company’s foreign currency denominated tranche of the 2015 Revolving Credit Facility , which are designated as non-derivative net investment hedges, are recognized at par value based on the exchange rate in effect on the date of the draw. Subsequent changes in the exchange rate of the Company’s non-derivative net investment hedge are recognized as part of the cumulative foreign currency translation adjustment within other comprehensive income (loss). Refer to Note 2 and Note 9 for additional information on the Company’s derivatives and non-derivative hedging instruments, including the fair value measurement of these instruments, as applicable. The following table summarizes the notional and fair value of the Company’s derivatives and hedging instruments at June 30, 2016. The fair value of the all of the Company’s derivatives is presented on its Condensed Consolidated Balance Sheets in derivative instruments, at fair value and the carrying value of the non-derivative net investment hedge is included in the balance of the Company’s 2015 Revolving Credit Facility. The notional value is an indication of the extent of the Company’s involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks:
Through its interest rate swaps, the Company is hedging exposure to variability in future interest payments on its debt facilities. At June 30, 2016, the interest rate swap derivative instruments were reported at their fair value as a net liability of $36,357. Swap (gain) loss of $(2,564) and $(734) was recognized as interest expense for the three and six months ended June 30, 2016, respectively, in the Condensed Consolidated Statements of Operations with respect to interest rate swap hedge ineffectiveness, or to amounts excluded from ineffectiveness, which relates to the off-market financing element associated with certain derivatives. As discussed in Note 6, during the six months ended June 30, 2016, the Company amended its 5-Year Term Loan and its 7-Year Term Loan in order to remove the 0.00% rate floor on the applicable LIBOR that existed in the original loan agreements, and as a result, during the three months ended June 30, 2016 the Company reversed previously recorded hedge ineffectiveness of $2,564. No gain or loss was recognized with respect to hedge ineffectiveness or to amounts excluded from ineffectiveness for the three and six months ended June 30, 2015. During the three and six months ended June 30, 2016, the Company reclassified $271 and $631, respectively, from accumulated other comprehensive income into interest expense related to a derivative terminated in 2015. Over time, the realized and unrealized gains and losses held in accumulated other comprehensive income will be reclassified into earnings in the same periods in which the hedged interest payments affect earnings. During the next 12 months, the Company expects that $10,882 will be reclassified from other comprehensive income as an increase in interest expense for the Company’s interest rate swaps as of June 30, 2016. Additionally, the Company will recognize $3,197 in interest expense on a straight-line basis over the remaining original term of terminated swaps through June 2019, representing amortization of the remaining accumulated other comprehensive income balance related to the swap, and of this amount $1,087 will be recognized in interest expense during the next 12 months. Through its foreign currency forward contract, the Company is mitigating its foreign exchange rate exposure to variability in the euro-U.S. dollar exchange rate, specifically in relation to funds received on its sale of 74.9% of its interest in the Goodman Europe JV in June 2016, which are in euro-denominated funds as of June 30, 2016. At June 30, 2016, the foreign currency forward contract was reported at its fair value as a liability of $378 in derivative instruments on the Company’s Condensed Consolidated Balance Sheets and because it is not designated as a hedging instrument, this value, which also represents its change in value during the period, was recognized as a reduction of other income on the Condensed Consolidated Statements of Operations. The change in value of the euro-denominated asset underlying the contract was an increase of $228, thus the net impact recognized within other income on the Company’s the Condensed Consolidated Statements of Operations was a net loss of $150. Through its non-derivative net investment hedge, which was entered into in September 2015, the Company is hedging exposure to changes in the euro-U.S. dollar exchange rate of its net equity investment in the Gramercy European Property Fund, which has euros as its functional currency. At June 30, 2016, the non-derivative net investment hedge was reported at its carrying value as a net liability of $49,950, which is included in the balance of the senior unsecured revolving credit facility on the Condensed Consolidated Balance Sheets. During the three and six months ended June 30, 2016, the Company recorded net gain (loss) of $970 and $(66), respectively, in other comprehensive income (loss) from the impact of exchange rates related to the non-derivative net investment hedge. No gain or loss was recognized with respect to non-derivative net investment hedge ineffectiveness, or to amounts excluded from ineffectiveness, in interest expense in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2016. When the non-derivative net investment is sold or substantially liquidated, the balance of the translation adjustment accumulated in other comprehensive income will be reclassified into earnings. |
Shareholders' Equity (Deficit) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity (Deficit) | Shareholders’ Equity (Deficit) The equity structure in the condensed consolidated financial statements following the reverse merger reflects the equity structure of the Company. As a result, the Company’s common shares outstanding have been adjusted retroactively for all prior periods presented computed on the basis of the number of shares outstanding multiplied by the exchange ratio of 3.1898 established in the Merger Agreement. As of June 30, 2016 and 2015, the Company’s authorized capital shares consist of 1,000,000,000 shares of beneficial interest, $0.01 par value per share, of which the Company is authorized to issue up to 990,000,000 common shares of beneficial interest, par value $0.01 per share, or common shares, and 10,000,000 preferred shares of beneficial interest, par value of $0.01, or preferred shares. As of June 30, 2016, 421,696,772 common shares and 3,500,000 preferred shares were issued and outstanding, respectively. All share, share price, and per share data has been updated retroactively to reflect the Merger exchange ratio of 3.1898. During the three and six months ended June 2016, the Company’s common dividends are as follows:
In February 2016, the Company’s board of trustees approved a share repurchase program authorizing the Company to repurchase up to $100,000 of the Company’s outstanding common shares. Purchases under the program will be made from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. For the three and six months ended June 30, 2016, the Company did not repurchase any shares. In February 2015, Legacy Gramercy’s board of directors approved a 1-for-4 reverse stock split of its common stock and outstanding OP Units. The reverse stock split was effective after the close of trading on March 20, 2015, and the Company’s common stock began trading on a reverse split-adjusted basis on the New York Stock Exchange on March 23, 2015. Preferred Shares At June 30, 2016, the Company has 3,500,000 of its Series A Preferred Shares outstanding with a mandatory liquidation preference of $25.00 per share. Holders of the Series A Preferred Shares are entitled to receive annual dividends of $1.78125 per share on a quarterly basis and dividends are cumulative, subject to certain provisions. On or after August 15, 2019, the Company can, at its option, redeem the Series A Preferred Shares at par for cash. Equity Plan Activities In June 2016, the Company instituted its 2016 Equity Incentive Plan, which was approved by the Company’s board of trustees and shareholders. The 2016 Equity Incentive Plan allows for the following awards to be made: (i) stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code, (ii) stock options that do not qualify, (iii) stock appreciation rights, (iv) share awards, (v) restricted share units, and (vi) dividend equivalents and other equity awards, including LTIP Units. The aggregate number of common shares of the Company that may be issued or transferred under the 2016 Equity Incentive Plan is 12,000,000 shares, subject to adjustment in certain circumstances. The Company’s common shares that are issued or transferred under the 2016 Equity Plan may be authorized but unissued common shares of the Company or reacquired common shares of the Company, including common shares of the Company purchased by it on the open market for purposes of the 2016 Equity Incentive Plan. The 2016 Equity Incentive Plan became effective on June 23, 2016 and will terminate on the day immediately preceding the tenth anniversary of its effective date, unless sooner terminated by the board of trustees. As of June 30, 2016, there were 12,000,000 shares available for grant under the 2016 Equity Incentive Plan. Following the Merger until the adoption of the 2016 Equity Incentive Plan in June 2016, the Company’s active equity incentive plan, from which share awards were issued, was the Chambers equity incentive plan, or the 2013 Equity Incentive Plan. The 2013 Equity Incentive Plan allowed for the following awards to be made: (i) stock options that qualify as incentive stock options under Section 422 of the Internal Revenue Code, (ii) stock options that do not qualify, (iii) stock appreciation rights, (iv) share awards, (v) phantom shares, and (vi) dividend equivalents and other equity awards. The Company’s 2004 Equity Incentive Plan, 2012 Inducement Plan, 2012 Outperformance Plan, and 2015 Equity Incentive Plan continued to exist following the Merger, however they became inactive and thus no new share awards will be issued out of any of those plans. In connection with the adoption of the 2015 Equity Incentive Plan, seven senior officers were issued a total of 308,444 restricted shares in June 2015, 50.0% of which will vest on each of the fourth and fifth anniversaries of the grant date, subject to continued employment. Effective at the closing of the Merger, the change in accelerated vesting control provisions of the 2012 Outperformance Plan were waived by all plan participants, and as a result the LTIP units will continue on, subject to the original service and performance conditions. Through June 30, 2016, 2,908,116 restricted shares had been issued under the Company’s Equity Incentive Plans, of which 59.5% have vested. Except for certain performance based awards, the vested and unvested shares are currently entitled to receive distributions on common shares if declared by the Company. Holders of restricted shares are prohibited from selling such shares until they vest but are provided the ability to vote such shares beginning on the date of grant. Compensation expense of $604 and $1,087 was recorded for the three and six months ended June 30, 2016, respectively, related to the issuance of restricted shares. Compensation expense of $253 and $498 was recorded for the three and six months ended June 30, 2015, respectively, related to the issuance of restricted shares. Compensation expense of $6,270 will be recorded over the course of the next 39 months representing the remaining weighted average vesting period of equity awards issued under the Equity Incentive Plans as of June 30, 2016. As of June 30, 2016 and December 31, 2015, the Company had 979,166 and 684,199 weighted-average unvested restricted shares outstanding, respectively. Compensation expense of $488 and $976 was recorded for the three and six months ended June 30, 2016, respectively, for the 2012 Outperformance Plan. Compensation expense of $488 and $976 was recorded for the three and six months ended June 30, 2015, respectively, for the 2012 Outperformance Plan. Compensation expense of $1,950 will be recorded over the course of the next 12 months, representing the remaining weighted average vesting period of the awards issued under the 2012 Outperformance Plan as of June 30, 2016. Deferred Stock Compensation Plan for Directors The Legacy Gramercy’s Directors’ Deferral Program terminated upon consummation of the Merger. In connection with the closing of the Merger, on December 17, 2015 each outstanding phantom share granted under Legacy Gramercy’s Directors’ Deferral Program, was vested and, on the first business day of the month following the Merger closing, converted into the right to receive a number of the Company’s common shares, rounded to the nearest whole share, determined by multiplying the number of subject phantom shares by the Exchange Ratio of the Merger. As a result, the directors received an aggregate of $916 in cash and 410,713 in shares in January 2016. The portion paid out in cash was classified as a liability on the Consolidated Balance Sheets as of December 31, 2015. Earnings per Share The Company has adopted the two-class computation method, and thus includes all participating securities in the computation of basic shares for the periods in which the Company has net income available to vested common shares outstanding. A participating security is defined as an unvested share-based payment award containing non-forfeitable rights to dividends regardless of whether or not the awards ultimately vest or expire. Net losses are not allocated to participating securities unless the holder has a contractual obligation to share in the losses. Earnings per share for the three and six months ended June 30, 2016 and 2015 are computed as follows:
Diluted income (loss) per share assumes the conversion of all common share equivalents into an equivalent number of common shares if the effect is not anti-dilutive. Options were computed using the treasury share method. The Company only includes the effect of the excess conversion premium on its Exchangeable Senior Notes in the calculation of diluted earnings per share, as the Company has the intent and ability to settle the debt component of the Exchangeable Senior Notes in cash and the excess conversion premium in shares. The weighted average price of the Company’s common shares for the three and six months ended June 30, 2016 was above the exchange price of $7.54 for the periods and the Company had net income available to vested common shares outstanding during the periods, therefore, the potential dilutive effect of the excess conversion premium was included in the calculation of diluted earnings per share for the three and six months ended June 30, 2016. The weighted average price of the Company’s common shares for the three and six months ended June 30, 2015 was above the exchange price of $7.76 for the periods, however due to the net loss available to vested common shares outstanding during the periods, the excess conversion premium was excluded from the calculation of earnings per share for the three and six months ended June 30, 2015. For the three months ended June 30, 2015, the Company excluded from its number of diluted shares used for EPS 48,051 share options, 2,209,912 unvested share based payment awards, 493,124 phantom share units, 1,548,246 OP Units, and 1,107,809 Exchangeable Senior Notes, because, due to the net loss from continuing operations excluding amounts attributable to noncontrolling interest and adjusted for preferred dividends declared during the period, these shares were anti-dilutive during the period. For the six months ended June 30, 2015, the Company excluded from its number of diluted shares used for EPS 49,062 share options, 2,198,126 unvested share based payment awards, 493,124 phantom share units, 1,624,396 OP Units, and 1,425,092 Exchangeable Senior Notes, because, due to the net loss from continuing operations excluding amounts attributable to noncontrolling interest and adjusted for preferred dividends declared during the period, these shares were anti-dilutive during the period. For the three and six months ended June 30, 2015, the Company excluded unvested restricted share awards of 544,288 and 532,502, respectively, from its weighted average basic shares outstanding due to the net loss from continuing operations excluding amounts attributable to noncontrolling interest and adjusted for preferred dividends declared during the period. Accumulated other comprehensive income (loss) Accumulated other comprehensive income (loss) as of June 30, 2016 and December 31, 2015 is comprised of the following:
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Noncontrolling Interest |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest | Noncontrolling Interest Noncontrolling interests represent the common units of limited partnership interest in the Company’s Operating Partnership, or OP Units, not held by the Company as well as third-party equity interests in the Company’s other consolidated subsidiaries. OP Units are able to be redeemed at the election of the holder for cash equal to the then fair market value of one of the Company’s common shares, par value $0.01 per share, except that the Company may, at its election, acquire each OP Unit for one of its common shares. The OP Unit holders do not have any obligation to provide additional contributions to the partnership, nor do they have any decision making powers or control over the business of the Operating Partnership. The OP Unit holders do not have voting rights; however, they are entitled to receive dividends. The OP Unit redemption rights are outside of the Company’s control, and thus the OP Units are classified as a component of temporary equity and are shown in the mezzanine equity section of the Company’s Condensed Consolidated Financial Statements. The Company is party by assumption to a registration rights agreement with the holders of the OP Units that requires the Company, subject to the terms and conditions and certain exceptions set forth therein, to file and maintain a registration statement relating to the issuance of shares of its common shares upon redemption of OP Units. In April 2016, each of the outstanding common units of limited partnership interest not held by the Company or its subsidiaries, which represented interests in Legacy Gramercy’s operating partnership and were redeemable for 3.1898 of the Company’s common shares following the Merger, were exchanged for 3.1898 OP units, which are each redeemable for one of the Company’s common shares as described above. All references to OP Units in the Company’s Condensed Consolidated Financial Statements refer to common units of limited partnership interest in Legacy Gramercy’s operating partnership prior to the exchange and to common units of limited partnership interest in GPT Operating Partnership LP following the exchange, and reflect the updated exchange ratio of one OP Unit redeemable for one of the Company’s common shares. As of June 30, 2016, the noncontrolling interest unit holders owned 1,145,220 OP Units, which can be redeemed for 1,145,220 of the Company’s common shares. The outstanding OP Units as of June 30, 2016 represent an interest of approximately 0.27% in the Company. During the six months ended June 30, 2016 and the year ended December 31, 2015, 265,689 and 453,129 OP Units, respectively, were converted into common shares of the Company. At June 30, 2016, 1,145,220 common shares of the Company were reserved for issuance upon redemption of OP Units. OP Units are recorded at the greater of cost basis or fair market value based on the closing share price of the Company’s common shares at the end of the reporting period. As of June 30, 2016, the value of the OP units was $10,559. The Company attributes a portion of its net income (loss) during each reporting period to noncontrolling interest based on the percentage ownership of OP Unit holders relative to the Company’s total outstanding common shares and OP Units. The Company recognizes changes in fair value in the OP Units through accumulated deficit, however decreases in fair value are recognized only to the extent that increases to the amount in temporary equity were previously recorded. The Company’s diluted earnings per share includes the effect of any potential shares outstanding from redemption of the OP Units. Below is the rollforward of the activity relating to the noncontrolling interests in the Operating Partnership as of June 30, 2016:
Interests in Other Operating Partnerships In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired a 50.0% equity interest in European Fund Manager, which provides investment and asset management services to the Gramercy European Property Fund. European Fund Manager is a VIE of the Company and is consolidated into its Condensed Consolidated Financial Statements. Refer to Note 2 for further discussion of the VIE and consolidation considerations. As of June 30, 2016 and December 31, 2015, the value of the Company’s interest in European Fund Manager was $(394) and $(249), respectively. The Company’s interest in European Fund Manager is presented in the equity section of the Company’s Condensed Consolidated Financial Statements. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Funding Commitments The Company is obligated to fund the development of Proportion Foods, a build-to-suit property in Round Rock, Texas, which is a consolidated VIE, and upon substantial completion of the development to acquire the property through a forward purchase contract. The Company’s remaining future commitment for the property at June 30, 2016 is approximately $20,182. As of June 30, 2016, the Company has funded $55,892 (€50,000) to the Gramercy European Property Fund, representing its total funding commitment to the Gramercy European Property Fund. As of December 31, 2015, the Company had funded $25,663 (€23,160) to the Gramercy European Property Fund. See Note 5, “Unconsolidated Equity Investments,” for further information on the Gramercy European Property Fund. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the closing date for completed transactions and (ii) the exchange rate that prevailed on December 31, 2015, in the case of unfunded commitments. Legal Proceedings The Company evaluates litigation contingencies based on information currently available, including the advice of counsel and the assessment of available insurance coverage. The Company will establish accruals for litigation and claims when a loss contingency is considered probable and the related amount is reasonably estimable. The Company will periodically review these contingencies which may be adjusted if circumstances change. The outcome of a litigation matter and the amount or range of potential losses at particular points may be difficult to ascertain. If a range of loss is estimated and an amount within such range appears to be a better estimate than any other amount within that range, then that amount is accrued. Legacy Gramercy, its board of directors, Chambers and/or Merger Sub are named as defendants in two pending putative class action lawsuits brought by purported Legacy Gramercy stockholders challenging the Merger. Two suits that were separately filed in New York Supreme Court, New York County, captioned (i) Berliner v. Gramercy Property Trust, et al., Index No. 652424/2015 (filed July 9, 2015) and (ii) Gensler v. Baum, et al., Index No. 157432/2015 (filed July 22, 2015), have been consolidated into a single action under the caption In re Gramercy Property Trust Stockholder Litigation, Index No. 652424/2015 (the “New York Action”). In addition, four suits that were separately filed in Circuit Court for Baltimore City, Maryland, captioned (i) Jobin v. DuGan, et al., Case No. 24-C-15-003942 (filed July 27, 2015); (ii) Vojik v. Gramercy Property Trust, et al., Case No. 24-C-15-004412 (filed August 25, 2015); (iii) Hoffbauer et al. v. Chambers Street Properties, et al., 24-C-15-004904 (filed September 24, 2015) (originally filed as two separate suits in the Circuit Court for Baltimore County, Maryland, captioned Plemons v. Chambers Street Properties, et al., Case No. 03-C-15-007943 (filed July 24, 2015) and Hoffbauer et al. v. Chambers Street Properties, et al., Case No. 03-C-15-008639 (filed August 12, 2015), and refiled as a single action in the Circuit Court for Baltimore County on September 24, 2015); and (iv) Morris v. Gramercy Property Trust, et al., Case No. 24-C-15-004972 (filed September 28, 2015) have been consolidated into a single action under the caption Glenn W. Morris v. Gramercy Property Trust Inc. et al., Case No. 24-C-15-004972 (the “Maryland Action,” and together with the New York Action, the “Actions”). The complaints allege, among other things, that the directors of Legacy Gramercy breached their fiduciary duties to Legacy Gramercy stockholders by agreeing to sell the Company for inadequate consideration and agreeing to improper deal protection terms in the merger agreement, and that the preliminary joint proxy statement/prospectus filed with the SEC on Form S-4 on September 11, 2015 was materially incomplete and misleading. The complaints also allege that Chambers, Merger Sub and/or Legacy Gramercy aided and abetted these purported breaches of fiduciary duty. The amended complaint in the Morris consolidated action also asserts derivative claims on behalf of Legacy Gramercy for breach of fiduciary duty against the directors of Legacy Gramercy. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief, an award of damages and/or costs/attorney fees. On December 7, 2015, the parties to the Actions entered into a Memorandum of Understanding (the “MOU”), which provides for the settlement of the Actions. While the defendants in the Actions continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of the plaintiffs or the class of stockholders of Legacy Gramercy, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the Actions, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the Actions and (iii) permit the Merger to proceed without risk of the courts in New York or Maryland ordering an injunction or damages in connection with the Actions, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing, pursuant to the terms of the MOU, to make certain supplemental disclosures related to the proposed Merger, which were set forth in Legacy Gramercy’s Current Report on Form 8-K filed with on December 7, 2015. The MOU contemplates that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including, among other things, confirmatory discovery and court approval following notice to Legacy Gramercy stockholders. In the event that the parties enter into a stipulation of settlement, a hearing will be scheduled at which a court will consider the fairness, reasonableness and adequacy of the settlement. If the settlement is finally approved by the court, it will resolve and release all claims by stockholders of Legacy Gramercy challenging any aspect of the proposed Merger, the Merger Agreement and any disclosure made in connection therewith, pursuant to terms that will be set forth in the notice sent to Legacy Gramercy stockholders prior to final approval of the settlement. In addition, in connection with the settlement, the parties contemplate that plaintiffs’ counsel will file a petition for an award of attorneys’ fees and expenses to be paid by Gramercy or its successor. There can be no assurance that the court will approve the settlement. In the event that the settlement is not approved or that the conditions are not satisfied, the settlement may be terminated. On October 1, 2015, a putative class action lawsuit was filed in the Superior Court of New Jersey, Law Division, Mercer County by a purported shareholder of Chambers. The action, captioned Elstein v. Chambers Street Properties et al., Docket No. L-002254-15 (the “New Jersey Action”), names as defendants Chambers, its board of trustees and Legacy Gramercy. The complaint alleges, among other things, that the trustees of Chambers breached their fiduciary duties to Chambers’ shareholders by agreeing to the Merger after a flawed sales process and by approving improper deal protection terms in the merger agreement, and that Legacy Gramercy aided and abetted these purported breaches of fiduciary duty. The complaint also alleges that the preliminary joint proxy statement/prospectus was materially misleading and incomplete. Plaintiffs seek, among other things, an injunction barring the Merger, rescission of the Merger to the extent it is already implemented, declaratory relief and an award of damages. On December 3, 2015, the parties to the New Jersey Action entered into a Stipulation of Settlement providing for the settlement of the New Jersey Action. While the defendants in the New Jersey Action continue to vigorously deny all allegations of wrongdoing, fault, liability or damage to any of the plaintiffs or the class of shareholders of Chambers, and believe that no supplemental disclosure is required under the applicable law, in order to (i) avoid the burden, inconvenience, expense and distraction of further litigation in connection with the New Jersey Action, (ii) finally put to rest and terminate all of the claims that were or could have been asserted against the defendants in the New Jersey Action and (iii) permit the Merger to proceed without risk of the Superior Court of New Jersey ordering an injunction or damages in connection with the New Jersey Action, Chambers and Legacy Gramercy agreed, without admitting any liability or wrongdoing, pursuant to the terms of the Stipulation of Settlement, to make certain supplemental disclosures related to the proposed Merger, all of which were set forth in Legacy Gramercy’s Current Report on Form 8-K filed with on December 7, 2015. The Stipulation of Settlement is subject to customary conditions, including court approval following notice to the Chambers shareholders. On April 4, 2016, the court granted preliminary approval of the settlement. On July 1, 2016 the court issued a final order approving the settlement. The defendants believe the lawsuits are without merit. In December 2010, the Company sold its 45.0% joint venture interest in the leased fee of the 2 Herald Square property in New York, New York, for approximately $25,600 plus assumed mortgage debt of approximately $86,100, or the 2 Herald Sale Transaction. Subsequent to the closing of the transaction, the New York City Department of Finance, or the NYC DOF, and New York State Department of Taxation, or the NYS DOT, issued notices of determination assessing, in the case of the NYC DOF notice, approximately $2,924 of real property transfer tax, plus interest, and, in the case of the NYS DOT notice, approximately $446 of real property transfer tax, plus interest, collectively, the Transfer Tax Assessments, against the Company in connection with the 2 Herald Sale Transaction. In September 2013, the Company filed a petition challenging the NYC DOF Transfer Tax Assessment with the New York City Tax Appeal Tribunal. In July 2014, the Company filed a similar petition challenging the NYS DOT Transfer Tax Assessment. Trial of the Company’s NYC DOF Transfer Tax Assessment appeal was completed in December 2014. In April 2015, the New York City Tax Appeals Tribunal, or the NYC Tribunal, rendered an opinion denying the Company’s petition challenging the NYC DOF Transfer Tax Assessment and ruled that the Company is liable for the NYC DOF Transfer Tax Assessment. In July 2015, the Company appealed the adverse decision of the NYC Tribunal. In July 2016, the Company’s appeal of the adverse NYC Tribunal decision was denied. The Company has until November 2016 to elect to file a further appeal of the adverse NYC Tribunal decision. In June 2016, the NY State Division of Tax Appeals ruled in the Company’s favor in connection with the NYS DOT Transfer Tax Assessment. The Company anticipates that the NYC DOF will appeal this adverse ruling and that the matter will be set for trial by late 2016 or early 2017. In April 2015, to stop the accrual of additional interest while the Company’s appeals are pending, the Company paid the NYC DOF $4,025 in full satisfaction of the NYC DOF Transfer Tax Assessment and the NYS DOT $617 in full satisfaction of the NYS DOF Transfer Tax Assessment. There was no additional interest recorded for the matter for the three and six months ended June 30, 2016. There was $$0 and $68 of additional interest recorded in discontinued operations for the matter for the three and six months ended June 30, 2015, respectively. In connection with the Company’s property acquisitions and the Merger, the Company has determined that there is a risk it will have to pay future amounts to tenants related to continuing operating expense reimbursement audits. The Company has estimated a range of loss and determined that its best estimate of total loss is $8,000, including $1,000 related to the Merger, which has been accrued and recorded in other liabilities as of June 30, 2016 and December 31, 2015. The Company has determined that there is a reasonable possibility that a loss may be incurred in excess of $8,000 and estimates this range to be $8,000 to $13,000. In addition, the Company and/or one or more of its subsidiaries is party to various litigation matters that are considered routine litigation incidental to its business, none of which are considered material. Office Leases The Company has several office locations, which are each subject to operating lease agreements. These office locations include the Company’s corporate office at 521 Fifth Avenue, New York, New York, and the Company’s regional offices located in Horsham, Pennsylvania, Clayton, Missouri, Chicago, Illinois, Dallas, Texas and London, United Kingdom. Additionally, in April 2016, the Company entered into a lease for a new corporate office location at 90 Park Avenue, New York, New York. The Company will relocate to the new office upon completion of improvements to the space, which is projected to be in the fourth quarter of 2016. Capital and Operating Ground Leases Certain properties acquired are subject to ground leases, which are accounted for as operating and capital leases. The ground leases have varying ending dates, renewal options and rental rate escalations, with the latest leases extending to June 2053. Future minimum rental payments to be made by the Company under these noncancelable ground leases, excluding increases resulting from increases in the consumer price index, are as follows:
The Company incurred rent expense on ground leases of $492 and $943 during the three and six months ended June 30, 2016, respectively. The Company incurred rent expense on ground leases of $394 and $778 during the three and six months ended June 30, 2015, respectively. |
Income Taxes |
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Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company has elected to be taxed as a REIT, and as such, generally will not be subject to U.S. federal income tax on taxable income that it distributes to its stockholders in accordance with REIT requirements. If the Company fails to qualify as a REIT in any taxable year, it will then be subject to U.S. federal income taxes until it is able to qualify for REIT status again, however, the Company believes that it is organized and will operate in such a manner as to qualify for treatment as a REIT and the Company intends to operate in the foreseeable future in such a manner so that it will qualify as a REIT for U.S. federal income tax purposes. The Company may, however, be subject to certain state and local taxes. Additionally, the Company’s TRSs are subject to federal, state and local taxes. The Company’s asset and property management business, Gramercy Asset Management, partially conducts its business through a wholly-owned TRS. In addition to the limitation on the Company’s use of its net operating losses under Section 382, since the Company uses separate subsidiary REITs and taxable REIT subsidiaries to conduct different aspects of its business, losses incurred by the individual subsidiary REITs and TRSs are only available to offset taxable income derived by each respective subsidiary REIT or TRS. For the three and six months ended June 30, 2016 the Company recorded $2,700 and $3,403 of income tax expense, respectively. For the three and six months ended June 30, 2015, the Company recorded $17 and $1,131 of income tax expense, respectively. Tax expense for the three and six months ended June 30, 2016 and 2015 in continuing operations is comprised of federal, state and local taxes primarily attributable to Gramercy Asset Management. To the extent the Company incurs any interest or penalties on its material uncertain tax positions, these amounts will be recognized in the financial statements as interest expense and operating expense, respectively. As of June 30, 2016 and December 31, 2015, the Company did not incur any material interest or penalties. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting As of June 30, 2016, the Company has determined that it has two reportable operating segments: Asset Management and Investments/Corporate. The reportable segments are determined based upon the management approach, which looks to the Company’s internal organizational structure. The Company’s lines of business require different support infrastructures. All significant inter-segment balances and transactions have been eliminated. The Asset Management segment includes substantially all of the Company’s activities related to asset and property management of commercial properties located throughout the United States and Europe. The Asset Management segment generates revenues from fee income related to the management agreements for properties owned by third parties throughout the United States and Europe. The Investments/Corporate segment includes all of the Company’s activities related to the investment and ownership of commercial properties located throughout the United States and Europe. The Investments/Corporate segment generates revenues from rental revenues from properties owned by the Company, either directly or in unconsolidated equity investments. The Company evaluates performance based on the following financial measures for each segment:
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information The following table represents supplemental cash flow disclosures for the three and six months ended June 30, 2016 and 2015:
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Subsequent Events |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In July 2016, the Duke JV sold its remaining property and completed its planned dissolution. As part of the property sale and dissolution, the Company received a final distribution of $41,060 from the Duke JV. In July 2016, the Company closed on the acquisition of three salvage yard industrial properties which comprise an aggregate 60.26 acres of land and were acquired for an aggregate purchase price of approximately $9,531. The properties are 100.0% leased with lease terms ending between August 2026 and August 2031. Additionally in July 2016, the Company closed on the acquisition of an industrial property which comprises 213,117 square feet, was acquired for a purchase price of approximately $17,750, and is 100.0% leased to three tenants with lease terms ending between December 2021 and November 2022. In July 2016, the Company’s board of trustees approved the establishment of an “at-the-market” equity issuance program, or ATM, pursuant to which the Company may offer and sell common shares, with an aggregate gross sales price of up to $400,000. The Company expects to file a prospectus supplement to its currently effective registration statement with the SEC during the third quarter. |
Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The Condensed Consolidated Financial Statements include the Company’s accounts and those of the Company’s subsidiaries which are wholly-owned or controlled by the Company, or entities which are variable interest entities, or VIEs, in which the Company is the primary beneficiary. The primary beneficiary is the party that absorbs a majority of the VIE’s anticipated losses and/or a majority of the expected returns. The Company has evaluated its investments for potential classification as variable interests by evaluating the sufficiency of each entity’s equity investment at risk to absorb losses. Entities which the Company does not control and are considered VIEs, but where the Company is not the primary beneficiary, are accounted for under the equity method. All significant intercompany balances and transactions have been eliminated. The equity interests of other limited partners in the Company’s Operating Partnership are reflected as noncontrolling interests. |
Real Estate Investments | Real Estate Investments The Company records acquired real estate investments as business combinations when the real estate is occupied, at least in part, at acquisition. Costs directly related to the acquisition of such investments are expensed as incurred. The Company allocates the purchase price of real estate to land, building, improvements and intangibles, such as the value of above- and below-market leases, and origination costs associated with the in-place leases at the acquisition date. The values of the above- and below-market leases are amortized and recorded as either an increase, in the case of below-market leases, or a decrease, in the case of above-market leases, to rental revenue over the remaining term of the associated lease. The values associated with in-place leases are amortized to depreciation and amortization expense over the remaining term of the associated lease. The Company assesses the fair value of the leases at acquisition based upon estimated cash flow projections that utilize appropriate discount rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. Additionally, for transactions that are business combinations, the Company evaluates the existence of goodwill or a gain from a bargain purchase at the time of acquisition. Acquired real estate investments involving sale-leasebacks that have newly-originated leases are recorded as asset acquisitions and accordingly, transaction costs incurred in connection with the acquisition are capitalized. Acquired real estate investments which are under construction are considered build-to-suit transactions and other acquired real estate investments that do not meet the definition of a business combination are recorded at cost. In build-to-suit transactions, the Company engages a developer to construct a property or provides funds to a tenant to develop a property. The Company capitalizes the funds provided to the developer/tenant and real estate taxes, if applicable, during the construction period. Certain improvements are capitalized when they are determined to increase the useful life of the building. Depreciation is computed using the straight-line method over the shorter of the estimated useful life at acquisition of the capitalized item or 40 years for buildings, five to ten years for building equipment and fixtures, and the lesser of the useful life or the remaining lease term for tenant improvements and leasehold interests. Maintenance and repair expenditures are charged to expense as incurred. In leasing space, the Company may provide funding to the lessee through a tenant allowance. If the Company is considered the owner of the leasehold improvements constructed using a tenant allowance, the Company capitalizes the amount of the allowance and depreciates it over the shorter of the useful life of the leasehold improvements or the lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or if the Company is not considered the owner of the improvements for accounting purposes, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. The Company also reviews the recoverability of the property’s carrying value when circumstances indicate a possible impairment of the value of a property, expected to result from the property’s use and eventual disposition. If management determines impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded in the Condensed Consolidated Statements of Operations to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used and for assets held for sale, an impairment loss is recorded to the extent that the carrying value exceeds the fair value less estimated cost of disposal. The estimated fair value of the asset becomes its new cost basis and if the asset is to be held and used, the new cost basis will be depreciated or amortized over its remaining useful life. |
Unconsolidated Equity Investments | Unconsolidated Equity Investments The Company accounts for substantially all of its unconsolidated equity investments under the equity method of accounting since it exercises significant influence, but does not unilaterally control the entities, and is not considered to be the primary beneficiary. In unconsolidated equity investments, the rights of the other investors are protective and participating. Unless the Company is determined to be the primary beneficiary, these rights preclude it from consolidating the investments. The investments are recorded initially at cost as unconsolidated equity investments, as applicable, and subsequently are adjusted for equity interest in net income (loss) and cash contributions and distributions. The amount of the investments on the Condensed Consolidated Balance Sheets is evaluated for impairment at each reporting period. None of the unconsolidated equity investment debt is recourse to the Company. Transactions with unconsolidated equity method entities are eliminated to the extent of the Company’s ownership in each such entity. Accordingly, the Company’s share of net income (loss) of these equity method entities is included in consolidated net income (loss). The Company’s 5.07% unconsolidated equity investment in CBRE Strategic Partners Asia, described more in Note 5, is presented in the Condensed Consolidated Financial Statements at fair value. CBRE Strategic Partners Asia is an investment company that accounts for its investments at fair value with changes in the fair value of the investments recorded in the statement of operations. See the “Fair Value Measurements” section of this Note 2 as well as Note 9, “Fair Value Measurements,” for further discussion of the fair value accounting methodology used for CBRE Strategic Partners Asia. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. |
Restricted Cash | Restricted Cash The Company had restricted cash of $65,748 and $17,354 at June 30, 2016 and December 31, 2015, respectively, which primarily consists of proceeds from property sales held by qualified intermediaries to be used for tax-deferred, like-kind exchanges under IRC Section 1031, as well as reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage loan obligations. |
Variable Interest Entities, Consolidated and Unconsolidated | Consolidated VIEs Proportion Foods In December 2015, the Company entered into a non-recourse financing arrangement with Big Proportion Austin LLC, or BIG, for a build-to-suit industrial property in Round Rock, Texas, or Proportion Foods. Concurrently, the Company entered into a forward purchase agreement with BIG, pursuant to which the Company will acquire the property, which is 100.0% leased to Proportion Foods, upon substantial completion of the facility’s development. The Company has determined that Proportion Foods is a VIE, as the equity holders of the entity do not have controlling financial interests and the obligation to absorb losses. The Company controls the activities that most significantly affect the economic outcome of Proportion Foods through its financing arrangement to fund the property’s development and its forward purchase agreement with BIG. As such, the Company has concluded that it is the entity’s primary beneficiary and has consolidated the VIE. The Company has a note receivable from BIG related to the financing arrangement, which is a note payable for BIG and thus eliminates upon consolidation of the VIE. The construction of the facility on the property is expected to be complete in December 2016 and the Company has committed $24,950 in financing for the construction. BIG is responsible for funding in excess of the $24,950 mortgage note. As of June 30, 2016, the Company has funded $8,926 for the property. Gramercy Europe Asset Management (European Fund Manager) In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired equity interests in the entity, hereinafter European Fund Manager, which provides investment and asset management services to the Gramercy European Property Fund. The Company has determined that European Fund Manager is a VIE, as the equity holders of that entity do not have controlling financial interests and the obligation to absorb losses. As Gramercy Europe Asset Management, through an investment advisory agreement with the VIE, controls the activities that most significantly affect the economic outcome of European Fund Manager, the Company has concluded that it is the entity’s primary beneficiary and has consolidated the VIE. European Fund Manager is expected to generate net cash inflows for the Company in the form of management fees in the future, however, if the VIE’s cash inflows are not sufficient to cover its obligations, the Company may provide financial support for the VIE. Unconsolidated VIEs Gramercy Europe Asset Management (European Fund Carry Co.) In connection with the Company’s December 2014 investment in the Gramercy European Property Fund, the Company acquired equity interests in the entity, hereinafter European Fund Carry Co., entitled to receive certain preferential distributions, if any, made from time-to-time by the Gramercy European Property Fund. The Company has determined that European Fund Carry Co. is a VIE, as the equity holders of that entity do not have controlling financial interests and the obligation to absorb losses. Decisions that most significantly affect the economic performance of European Fund Carry Co. are decided by a majority vote of that VIE’s shareholders. As such, the Company does not have a controlling financial interest in the VIE and has accounted for it as an equity investment. As of June 30, 2016 and December 31, 2015, European Fund Carry Co. had net assets of $(19) and $(5). Investment in Retained CDO Bonds The Company holds non-investment grade subordinate bonds, preferred shares and ordinary shares of three collateralized debt obligations, or the Retained CDO Bonds, which it recognized subsequent to the disposal of its Gramercy Finance segment, or Gramercy Finance, and exit from the commercial real estate finance business in March 2013. The Company is not obligated to provide any financial support to these collateralized debt obligations, or CDOs. The Company’s maximum exposure to loss is limited to its interest in the Retained CDO Bonds and the Company does not control the activities that most significantly impact the VIE’s economic performance. |
Assets Held For Sale and Discontinued Operations | Assets Held for Sale and Discontinued Operations As of June 30, 2016 and December 31, 2015, the Company had one and six assets classified as held for sale, respectively. One and six of the assets held for sale as of June 30, 2016 and December 31, 2015, respectively, represent Chambers properties that qualified as held for sale as of the closing date of the Merger and are included within discontinued operations, in accordance with ASC 360, as these assets acquired in the Merger do not align with the Company’s investment strategy and therefore will be sold. Real estate investments to be disposed of are reported at the lower of carrying amount or estimated fair value, less costs to sell. Once an asset is classified as held for sale, depreciation and amortization expense is no longer recorded. |
Tenant and Other Receivables | Tenant and Other Receivables Tenant and other receivables are derived from management fees, rental revenue and tenant reimbursements. Management fees, including incentive management fees, are recognized as earned in accordance with the terms of the management agreements. The management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services, and management of capital improvements or projects on the underlying assets. Rental revenue is recorded on a straight-line basis over the initial term of the lease. Since many leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that will only be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Tenant and other receivables also include receivables related to tenant reimbursements for common area maintenance expenses and certain other recoverable expenses that are recognized as revenue in the period in which the related expenses are incurred. Tenant and other receivables are recorded net of the allowances for doubtful accounts, which as of June 30, 2016 and December 31, 2015 were $94 and $204, respectively. The Company continually reviews receivables related to rent, tenant reimbursements, and management fees, including incentive fees, and determines collectability by taking into consideration the tenant or asset management clients’ payment history, the financial condition of the tenant or asset management client, business conditions in the industry in which the tenant or asset management client operates and economic conditions in the area in which the property or asset management client is located. In the event that the collectability of a receivable is in doubt, the Company increases the allowance for doubtful accounts or records a direct write-off of the receivable. |
Intangible Assets and Liabilities | Intangible Assets and Liabilities The Company follows the acquisition method of accounting for business combinations. The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings and improvements on an as-if vacant basis and identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates, the value of in-place leases, and above-market and below-market ground rent intangibles. The above- and below-market lease values are amortized as a reduction of and increase to rental revenue, respectively, over the remaining non-cancelable terms of the respective leases. The value of in-place leases is amortized to depreciation and amortization expense over the remaining non-cancelable term of the respective leases. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to be material, the Company amortizes such below-market lease value into rental revenue over the renewal period. If a tenant terminates its lease prior to its contractual expiration and no future rental payments will be received, any unamortized balance of the market lease intangibles will be written off to rental revenue and any unamortized balance of the in-place lease intangibles will be written off to depreciation and amortization expense. The above- and below-market ground rent intangible values are amortized as a reduction of and increase to rent expense, respectively, over the remaining non-cancelable terms of the respective leases. If the Company terminates its lease prior to its contractual expiration and no future rent payments will be paid, any unamortized balance of the ground rent intangibles will be written off to rent expense. |
Goodwill | Goodwill Goodwill represents the fair value of the collaboration expected to be achieved upon consummation of a business combination and is measured as the excess of consideration transferred over the net assets acquired at acquisition date. The Company initially recognized goodwill of $3,887 related to the acquisition of Gramercy Europe Limited, or Gramercy Europe Asset Management, however during the second quarter of 2015, as a result of finalization of the purchase price allocation for the acquisition, the Company decreased the amount allocated to goodwill by $85 and thus the final purchase price allocation to goodwill as a result of the acquisition was $3,802. The adjustment to goodwill for the finalized purchase price was primarily related to a reduction in the contract intangible value as well as an increase in the accrued income recorded for incentive fees. The carrying value of goodwill is adjusted each reporting period for the effect of foreign currency translation adjustments. The carrying value of goodwill at June 30, 2016 and December 31, 2015 was $3,223 and $3,568, respectively. The Company’s goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company takes a qualitative approach to consider whether an impairment of goodwill exists prior to quantitatively determining the fair value of the reporting unit in step one of the impairment test. |
Deferred Costs | Deferred Costs Deferred costs consist of deferred financing costs, deferred acquisition costs, and deferred leasing costs. Deferred costs are presented net of accumulated amortization. The Company’s deferred financing costs are comprised of costs associated with the Company’s unsecured credit facilities and include commitment fees, issuance costs, and legal and other third-party costs associated with obtaining the related financing. Deferred financing costs are amortized on a straight-line or effective interest basis over the contractual terms of the respective agreements and the amortization is reflected as interest expense. Unamortized deferred financing costs are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. During the first quarter of 2016, the Company adopted accounting guidance related to the presentation of deferred financing costs on the balance sheet and reclassified amounts from the deferred costs line pertaining to debt arrangements other than its unsecured credit facilities, that were within the asset section, to instead be netted against the corresponding debt liability for all periods presented. See “Recently Issued Accounting Pronouncements” below for further discussion of the new accounting guidance for deferred financing costs. The Company’s deferred acquisition costs consist primarily of lease inducement fees paid to secure acquisitions and are amortized on a straight-line basis over the related lease term as a reduction from rental revenue. The Company’s deferred leasing costs include direct costs, such as lease commissions, incurred to initiate and renew operating leases and are amortized on a straight-line basis over the related lease term as a reduction from rental revenue. |
Fair Value Measurements | Fair Value Measurements At June 30, 2016 and December 31, 2015, the Company measured its Retained CDO Bonds, derivative instruments, and CBRE Strategic Partners Asia on a recurring basis and measured its real estate investments classified as held for sale at Merger closing on a non-recurring basis. ASC 820-10, “Fair Value Measurements and Disclosures,” among other things, establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments and other assets and liabilities at fair value. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, fair values are not necessarily indicative of the amounts the Company could realize on disposition of these assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or an exit price. The level of pricing observability generally correlates to the degree of judgment utilized in measuring the fair value of financial instruments and other assets and liabilities. The investment manager of CBRE Strategic Partners Asia applies valuation techniques for the Company’s investment carried at fair value based upon the application of the income approach, the direct market comparison approach, the replacement cost approach or third-party appraisals to the underlying assets held in the unconsolidated entity in determining the net asset value attributable to the Company’s ownership interest therein. The three broad levels defined are as follows: Level I – This level is comprised of financial instruments and other assets and liabilities that have quoted prices that are available in liquid markets for identical assets or liabilities. Level II – This level is comprised of financial instruments and other assets and liabilities for which quoted prices are available but which are traded less frequently and instruments that are measured at fair value using management’s judgment, where the inputs into the determination of fair value can be directly observed. Level III – This level is comprised of financial instruments and other assets and liabilities that have little to no pricing observability as of the reported date. These financial instruments do not have active markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment and assumptions. For a further discussion regarding fair value measurements see Note 9, “Fair Value Measurements.” |
Revenue Recognition | Revenue Recognition Real Estate Investments Rental revenue from leases on real estate investments is recognized on a straight-line basis over the term of the lease, regardless of when payments are contractually due. The excess of rental revenue recognized over the amounts contractually due according to the underlying leases are included in deferred revenue on the Condensed Consolidated Balance Sheets. For leases on properties that are under construction at the time of acquisition, the Company begins recognition of rental revenue upon completion of construction of the leased asset and delivery of the leased asset to the tenant. The Company’s lease agreements with tenants also generally contain provisions that require tenants to reimburse the Company for real estate taxes, insurance costs, common area maintenance costs, and other property-related expenses. Under lease arrangements in which the Company is the primary obligor for these expenses, such amounts are recognized as both revenues and operating expenses for the Company. Under lease arrangements in which the tenant pays these expenses directly, such amounts are not included in revenues or expenses. These reimbursement amounts are recognized in the period in which the related expenses are incurred. The Company recognizes sales of real estate properties only upon closing. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized using the full accrual method upon closing when the collectability of the sale price is reasonably assured and the Company is not obligated to perform significant activities after the sale. Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sale of real estate. Asset Management Business The Company’s asset and property management agreements may contain provisions for fees related to dispositions, administration of the assets including fees related to accounting, valuation and legal services, and management of capital improvements or projects on the underlying assets. The Company recognizes revenue for fees pursuant to its management agreements in the period in which they are earned. Management fees received prior to the date earned are included in deferred revenue on the Condensed Consolidated Balance Sheets. Certain of the Company’s asset management contracts include provisions that may allow it to earn additional fees, generally described as incentive fees or profit participation interests, based on the achievement of a targeted valuation of the managed assets or the achievement of a certain internal rate of return on the managed assets. The Company recognizes incentive fees on its asset management contracts based upon the amount that would be due pursuant to the contract, if the contract were terminated at the reporting date. If the contract may be terminated at will, revenue will only be recognized for the amount that would be due pursuant to that termination. If the incentive fee is a fixed amount, only a proportionate share of revenue is recognized at the reporting date, with the remaining fees recognized on a straight-line basis over the measurement period. The values of incentive management fees are periodically evaluated by management. For the three and six months ended June 30, 2016, the Company recognized incentive fees of $14,217 and $15,190, respectively. For the three months ended June 30, 2015, the Company recorded an adjustment of $(64) to incentive fees. For the six months ended June 30, 2015, the Company recognized incentive fees of $2,971. Investment and Other Income Investment income consists primarily of income accretion on the Company’s Retained CDO Bonds, which are measured at fair value on a quarterly basis using a discounted cash flow model. Other income primarily consists of interest income on servicing advances and realized foreign currency exchange gain (loss). |
Stock-Based Compensation Plans | Share-Based Compensation Plans The Company has share-based compensation plans, described more fully in Note 11. The Company accounts for share-based awards using the fair value recognition provisions. Awards of shares or restricted shares are expensed as compensation over the benefit period and may require inputs that are highly subjective and require significant management judgment and analysis to develop. The Company assumes a forfeiture rate which impacts the amount of aggregate compensation cost recognized. In accordance with the provisions of the Company’s share-based compensation plans, the Company accepts the return of shares of the Company’s common shares, at the current quoted market price to satisfy minimum statutory tax-withholding requirements related to shares that vested during the period. The Company also grants awards pursuant to its share-based compensation plans in the form of LTIP units, which are a class of limited partnership interests in the Company’s Operating Partnership. |
Foreign Currency | Foreign Currency Gramercy Europe Asset Management operates an asset and property management business located in the United Kingdom. The Company owns one property located in the United Kingdom, two properties in Canada, and has unconsolidated equity investments in Europe and Asia. The Company also has euro-denominated borrowings outstanding under the multi-currency portion of its revolving credit facility. Refer to Note 5 for more information on the Company’s foreign unconsolidated equity investments. Translation The Company has interests in the European Union and Canada, for which the functional currencies are the euro, the British pound sterling and the Canadian dollar. The Company performs the translation from the euro, the British pound sterling or the Canadian dollar, to the U.S. dollar for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate during the period. The Company reports the gains and losses resulting from such translation as a component of other comprehensive income (loss). The Company recorded net translation gains (losses) of $(8,686) and $(2,567) for the three and six months ended June 30, 2016, respectively. The Company recorded net translation gains (losses) of $269 and $51 for the three and six months ended June 30, 2015, respectively. These translation gains and losses are reclassified to earnings when the Company has substantially exited from all investments in the related currency. Transaction Gains or Losses A transaction gain or loss realized upon settlement of a foreign currency transaction will be included in earnings for the period in which the transaction is settled. Foreign currency intercompany transactions that are scheduled for settlement are included in the determination of net income. Intercompany foreign currency transactions of a long-term nature that do not have a planned or foreseeable future settlement date, in which the entities to the transactions are consolidated or accounted for by the equity method in the Company’s financial statements, are not included in net income but are reported as a component of other comprehensive income (loss). Net realized gains (losses) are recognized on foreign currency transactions in connection with the transfer of cash from or to foreign operations of subsidiaries or equity investments to the parent company. |
Derivatives and Non-Derivative Hedging Instruments | Derivatives and Non-Derivative Hedging Instruments In the normal course of business, the Company is exposed to the effect of interest rate and foreign exchange rate changes. The Company limits these risks by following established risk management policies and procedures including the use of derivatives and non-derivative net investment hedges. The Company uses a variety of derivative instruments that are considered “plain vanilla” derivatives to manage, or hedge, interest rate risk. The Company enters into derivative and hedging instruments that will be maximally effective in reducing the interest rate risk and foreign currency exchange rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. The Company’s derivatives and non-derivative hedging instruments typically include interest rate swaps, caps, collars and floors, foreign currency forward contracts, as well as non-derivative net investment hedges. The Company expressly prohibits the use of unconventional derivative instruments and using derivative instruments for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. The Company recognizes all derivatives on the Condensed Consolidated Balance Sheets at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedged asset, liability or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a hedging derivative’s change in fair value is immediately recognized in earnings. Derivative accounting may increase or decrease reported net income and shareholders’ equity prospectively, depending on future levels of the London Interbank Offered Rate, or LIBOR, swap spreads, foreign exchange rates, and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows, provided the contract is carried through to full term. The Company’s non-derivative hedging instrument, the foreign currency denominated tranche of the Company’s 2015 Revolving Credit Facility, is reported at carrying value on its Condensed Consolidated Balance Sheets. As the non-derivative net investment hedge is denominated in euros, the Company translates the carrying value in euros into its functional and reporting currency of U.S. dollars at the period-ending rate and reports this value in its financial statements, with the foreign currency translation adjustment associated with the hedged net investment reported in the cumulative translation adjustment within other comprehensive income (loss). Refer to Note 10 for more information on the Company’s derivatives and non-derivative hedging instruments. |
Other Assets | Other Assets The Company makes payments for certain expenses such as insurance and property taxes in advance of the period in which it receives the benefit. These payments are classified as other assets and amortized over the respective period of benefit relating to the contractual arrangement. Other assets also includes deposits related to pending acquisitions and financing arrangements, as required by a seller or lender, respectively. Costs prepaid in connection with securing financing for a property are reclassified into deferred financing costs at the time the transaction is completed. Additionally, other assets includes costs of software purchased for internal use and as well as the value of contracts assumed by the Company pursuant to a business combination, such as asset or property management contracts. |
Servicing Advances Receivable | Servicing Advances Receivable The Company’s servicing advances receivable consisted of its accrual for the reimbursement of servicing advances, including expenses such as legal fees and professional fees incurred while the Company was the collateral manager of the CDOs, which were recognized as part of the disposal of Gramercy Finance in March 2013. |
Retained CDO Bonds | Retained CDO Bonds The Company recognized its Retained CDO Bonds at fair value in March 2013 subsequent to the disposal of Gramercy Finance. Management estimated the timing and amount of cash flows expected to be collected and recognized an investment in the Retained CDO Bonds equal to the net present value of these discounted cash flows. There is no guarantee that the Company will realize any proceeds from this investment, or what the timing will be for the expected remaining life of the Retained CDO Bonds. The Company considers these investments to be not of high credit quality and does not expect a full recovery of interest and principal. Therefore, the Company has suspended interest income accruals on these investments. On a quarterly basis, the Company evaluates the Retained CDO Bonds to determine whether significant changes in estimated cash flows or unrealized losses on these investments, if any, reflect a decline in value which is other-than-temporary. If there is a decrease in estimated cash flows and the investment is in an unrealized loss position, the Company will record an other-than-temporary impairment, or OTTI, in the Condensed Consolidated Statements of Operations. To determine the component of the OTTI related to expected credit losses, the Company compares the amortized cost basis of the Retained CDO Bonds to the present value of the revised expected cash flows, discounted using the pre-impairment yield. Conversely, if the security is in an unrealized gain position and there is a decrease or significant increase in expected cash flows, the Company will prospectively adjust the yield using the effective yield method. |
Income Taxes | Income Taxes The Company elected to be taxed as a REIT, under Sections 856 through 860 of the Internal Revenue Code, beginning with its taxable year ended December 31, 2004. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90.0% of its ordinary taxable income, to shareholders. As a REIT, the Company generally will not be subject to U.S. federal income tax on taxable income that the Company distributes to its shareholders. If the Company fails to qualify as a REIT in any taxable year, it will then be subject to U.S. federal income taxes on taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distributions to shareholders. However, the Company believes that it will be organized and will operate in such a manner as to qualify for treatment as a REIT and the Company intends to operate in the foreseeable future in such a manner so that it will qualify as a REIT for U.S. federal income tax purposes. The Company is subject to certain state and local taxes. The Company’s TRSs are subject to federal, state and local taxes. For the three and six months ended June 30, 2016, the Company recorded $2,700 and $3,403 of income tax expense, respectively. For the three and six months ended June 30, 2015, the Company recorded $17 and $1,131 of income tax expense, respectively. Tax expense for each year is comprised of federal, state, local, and foreign taxes. Income taxes, primarily related to the Company’s TRSs, are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if the Company believes it is more likely than not that all or a portion of a deferred tax asset will not be realized. Any increase or decrease in a valuation allowance is included in the tax provision when such a change occurs. The Company’s policy for interest and penalties, if any, on material uncertain tax positions recognized in the financial statements is to classify these as interest expense and operating expense, respectively. |
Earnings Per Share | Earnings Per Share The Company presents both basic and diluted earnings per share, or EPS. Basic EPS excludes dilution and is computed by dividing net income available to vested common shareholders by the weighted average number of vested common shares outstanding during the period. The Company has adopted the two-class computation method, and thus includes all participating securities in the computation of basic shares for the periods in which the Company has net income available to vested common shares outstanding. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, as long as their inclusion would not be anti-dilutive. Refer to Note 11 for further discussion of the computation of EPS. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash investments, debt investments and accounts receivable. The Company places its cash investments in excess of insured amounts with high quality financial institutions. Concentrations of credit risk also arise when a number of the Company’s tenants or asset management clients are engaged in similar business activities or are subject to similar economic risks or conditions that could cause their inability to meet contractual obligations to the Company. The Company regularly monitors its portfolio to assess potential concentrations of credit risk. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. During the first quarter of 2016, the Company adopted ASU 2015-03, Simplifying the Presentation of Debt Issuances Costs, which requires the Company to reclassify debt financing costs, which were previously accounted for on the deferred costs line within the asset section, and present them in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability, with the exception of deferred financing costs associated with the credit facility which remain in deferred costs in the asset section on the Condensed Consolidated Balance Sheets. Deferred financing costs totaling $6,389 have been reclassified in the December 31, 2015 Condensed Consolidated Balance Sheet from the deferred costs line and netted against the corresponding debt liability. See “Recently Issued Accounting Pronouncements” below for further discussion of the new accounting guidance for deferred financing costs. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers, which creates a new Topic ASC 606, Revenue from Contracts with Customers. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires increased disclosures related to revenue recognition. Pursuant to ASU 2015-14, Revenue from Contracts with Customers, issued in August 2015, ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption only permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods therein. In April 2016, the FASB issued ASU 2016-10, and in May 2016, the FASB issued ASU 2016-11 and ASU 2016-12, which are clarification updates related to the revenue recognition guidance in ASU 2014-09 and have the same effective date and transition requirements as ASU 2014-09. The Company will appropriately adopt and apply the guidance retrospectively for its fiscal year ended December 31, 2018 and the interim periods within that year. The Company is currently evaluating the guidance to determine the impact it may have on its Condensed Consolidated Financial Statements. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities. Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. The guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this guidance during the first quarter of 2016, which did not result in changes to the Company’s conclusions regarding consolidation of applicable entities. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which serves to simplify the presentation of debt issuance costs in a company’s financial statements. The amendments in the update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that liability. The update is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. In August 2015, the FASB issued ASU 2015-15, Interest – Imputation of Interest, which allows an entity to present the debt issuance costs from a line-of-credit arrangement as an asset. The Company adopted this guidance during the first quarter of 2016 and reclassified amounts in each period presented. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements as the update relates only to changes in financial statement presentation. See the “Reclassification” section above for further details on the adoption of this guidance. In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The update requires companies to account for the software license element of a cloud computing arrangement consistent with the acquisition of other software licenses and other licenses of intangible assets. The update is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this guidance during the first quarter of 2016. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The update will be effective beginning in the first quarter of 2019 and early adoption is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on its Condensed Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The update serves to simplify the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification of awards on the statement of cash flows. The guidance in the ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted for any interim or annual period. The Company has not elected early adoption of the amendments in the updates and expects that the new guidance will not have a material impact on its Condensed Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the existing accounting guidance related to credit losses on financial instruments. The amendments in the update replace the incurred loss impairment methodology in the current accounting standards 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. The update is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting the update on its Condensed Consolidated Financial Statements. |
Business and Organization (Tables) |
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Properties | As of June 30, 2016, the Company’s wholly-owned portfolio of net leased properties is summarized as follows:
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Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Acquired Lease Obligations | Intangible assets and liabilities consist of the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table provides the weighted-average amortization period as of June 30, 2016 for intangible assets and liabilities and the projected amortization expense for the next five years.
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Schedule of Variable Interest Entities | The following is a summary of the Company’s involvement with VIEs as of June 30, 2016:
The following is a summary of the Company’s involvement with VIEs as of December 31, 2015:
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Schedule of Retained Collateralized Debt Obligation Bonds | A summary of the Company’s Retained CDO Bonds as of June 30, 2016 is as follows:
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Other Than Temporary Impairment Credit Losses Recognized in Earnings | The following table summarizes the activity related to credit losses on the Retained CDO Bonds for the six months ended June 30, 2016 and for the year ended December 31, 2015:
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Dispositions, Assets Held for Sale, and Discontinued Operations (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations | The following table summarizes the assets held for sale and liabilities related to the assets held for sale as of June 30, 2016 and December 31, 2015:
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Schedule of Operating Results Of Assets held for sale Including in Discontinued Operations | The following operating results for Gramercy Finance, the assets previously sold and the assets that were assumed in the Merger and simultaneously designated as held for sale for the three and six months ended June 30, 2016 and 2015 are included in discontinued operations for all periods presented:
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Schedule of Significant Operating and Investing Noncash Items | The table below presents additional relevant information pertaining to results of discontinued operations for the six months ended June 30, 2016 and 2015, including depreciation, amortization, capital expenditures, and significant operating and investing noncash items:
The following table represents supplemental cash flow disclosures for the three and six months ended June 30, 2016 and 2015:
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Real Estate Investments (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The initial recording of the assets is summarized as follows:
The aggregate changes from the preliminary purchase price allocations to the finalized purchase price allocations, in accordance with ASU 2015-16, which the Company adopted in the third quarter of 2015, are shown in the table below:
During the six months ended June 30, 2016, the Company’s property acquisitions are summarized as follows:
During the year ended December 31, 2015, the Company’s property acquisitions are summarized as follows:
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Business Acquisition, Pro Forma Information | The table includes pro forma operating results for the assets acquired in the Merger.
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Schedule of Preliminary Purchase Price Allocations Acquired Assets and Liabilities | The following table summarizes the preliminary purchase price allocation, which represents the current best estimate of acquisition date fair values of the assets acquired and liabilities assumed:
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Unconsolidated Equity Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | As of June 30, 2016 and December 31, 2015, the Company owned properties through unconsolidated equity investments and had investment interests in these unconsolidated entities as follows:
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Summary Investment Holdings | The following is a summary of the Company’s unconsolidated equity investments for the six months ended June 30, 2016:
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Schedule of Combined Balance Sheet for the Company's Joint Venture | The Condensed Consolidated Balance Sheets for the Company’s unconsolidated equity investments at June 30, 2016 are as follows:
The Condensed Consolidated Balance Sheets for the Company’s unconsolidated equity investments at December 31, 2015 are as follows:
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Schedule of Combined Income Statement for the Company's Joint Venture | The statements of operations for the unconsolidated equity investments for the three months ended June 30, 2016 and 2015 or partial period for acquisitions or dispositions which closed during these periods, are as follows:
The Condensed Consolidated Statements of Operations for the unconsolidated equity investments for the six months ended June 30, 2016 and 2015 or partial period for acquisitions or dispositions which closed during these periods, are as follows:
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Schedule of Long-term Debt | The following is a summary of the secured financing arrangements within the Company’s unconsolidated equity investments as of June 30, 2016:
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Debt Obligations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage Notes Payable | The following is a summary of the Company’s secured financing arrangements as of June 30, 2016:
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Schedule of Line of Credit Facilities | The terms of the Company’s unsecured revolving credit facility and term loans, as well as outstanding balances as of June 30, 2016 and December 31, 2015, are set forth in the table below:
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Schedule of Maturities of Long-term Debt | Combined aggregate principal maturities of the Company’s unsecured debt obligations, non-recourse mortgages, and Exchangeable Senior Notes, in addition to associated interest payments, as of June 30, 2016 are as follows:
|
Leasing Agreements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||
Leases, Operating [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Lease Agreements | Future minimum rental revenues under non-cancelable leases excluding reimbursements for operating expenses as of June 30, 2016 are as follows:
|
Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Value and Fair Value of Financial Instruments | The following table presents the carrying value in the financial statements and approximate fair value of assets and liabilities measured on a recurring and non-recurring basis at June 30, 2016 and December 31, 2015:
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis and on a non-recurring basis are categorized in the table below based upon the lowest level of significant input to the valuations.
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Fair Value, Assets and Liabilities Measured on Recurring Basis, Valuation Techniques | Quantitative information regarding the valuation techniques and the range of significant unobservable Level III inputs used to determine fair value measurements on a recurring basis as of June 30, 2016 are:
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following roll forward table reconciles the beginning and ending balances of financial assets measured at fair value on a recurring basis using Level III inputs:
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following roll forward table reconciles the beginning and ending balances of financial liabilities measured at fair value on a recurring basis using Level III inputs:
(1) The Company’s foreign currency forward contract is not included as it is classified as a Level II investment. |
Derivatives and Non-Derivative Hedging Instruments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instrument Detail [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The following table summarizes the notional and fair value of the Company’s derivatives and hedging instruments at June 30, 2016. The fair value of the all of the Company’s derivatives is presented on its Condensed Consolidated Balance Sheets in derivative instruments, at fair value and the carrying value of the non-derivative net investment hedge is included in the balance of the Company’s 2015 Revolving Credit Facility. The notional value is an indication of the extent of the Company’s involvement in this instrument at that time, but does not represent exposure to credit, interest rate or market risks:
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Shareholders' Equity (Deficit) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared | During the three and six months ended June 2016, the Company’s common dividends are as follows:
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Schedule of Calculation of Numerator and Denominator in Earnings Per Share | Earnings per share for the three and six months ended June 30, 2016 and 2015 are computed as follows:
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Schedule of Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss) as of June 30, 2016 and December 31, 2015 is comprised of the following:
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Noncontrolling Interest (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest in the Operating Partnership | Below is the rollforward of the activity relating to the noncontrolling interests in the Operating Partnership as of June 30, 2016:
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments | Future minimum rental payments to be made by the Company under these noncancelable ground leases, excluding increases resulting from increases in the consumer price index, are as follows:
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Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Evaluation of Performance Based on Financials Measure for Each Segment | The Company evaluates performance based on the following financial measures for each segment:
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Supplemental Cash Flow Information (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flow Activities | The table below presents additional relevant information pertaining to results of discontinued operations for the six months ended June 30, 2016 and 2015, including depreciation, amortization, capital expenditures, and significant operating and investing noncash items:
The following table represents supplemental cash flow disclosures for the three and six months ended June 30, 2016 and 2015:
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Business and Organization (Summary of Wholly-Owned Properties) (Details) |
Jun. 30, 2016
ft²
Property
|
Dec. 31, 2015
Property
|
---|---|---|
Real Estate Properties [Line Items] | ||
Number of Properties | 38 | 41 |
Wholly Owned Properties [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Properties | 289 | |
Rentable Square Feet | ft² | 52,943,604 | |
Occupancy | 98.80% | |
Industrial Property [Member] | Wholly Owned Properties [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Properties | 172 | |
Rentable Square Feet | ft² | 42,216,785 | |
Occupancy | 98.90% | |
Office Building [Member] | Wholly Owned Properties [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Properties | 108 | |
Rentable Square Feet | ft² | 9,539,561 | |
Occupancy | 98.20% | |
Specialty Retail [Member] | Wholly Owned Properties [Member] | ||
Real Estate Properties [Line Items] | ||
Number of Properties | 9 | |
Rentable Square Feet | ft² | 1,187,258 | |
Occupancy | 100.00% |
Significant Accounting Policies (Schedule of Retained Collateralized Debt Obligation Bonds) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016
USD ($)
security
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2016
USD ($)
security
|
Jun. 30, 2015
USD ($)
|
|
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||||
Number of Securities | security | 9 | 9 | ||
Face Value | $ 379,515 | $ 379,515 | ||
Amortized Cost | 7,345 | 7,345 | ||
Gross Unrealized Gain | 1,977 | |||
Other-than-temporary impairment | 0 | |||
Fair Value | $ 9,322 | $ 9,322 | ||
Weighted Average Expected Life | 2 years 2 months 12 days | |||
Available-for-sale Securities [Member] | ||||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||||
Number of Securities | security | 9 | 9 | ||
Face Value | $ 379,515 | $ 379,515 | ||
Amortized Cost | 7,345 | 7,345 | ||
Gross Unrealized Gain | 1,977 | |||
Other-than-temporary impairment | 0 | $ 0 | 0 | $ 0 |
Fair Value | $ 9,322 | $ 9,322 | ||
Weighted Average Expected Life | 2 years 2 months 12 days |
Dispositions, Assets Held for Sale, and Discontinued Operations (Summary of Assets and Liabilities Held-for-sale) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets held for sale | ||
Total assets | $ 10,074 | $ 420,485 |
Liabilities related to assets held for sale | ||
Total liabilities | 371 | 291,364 |
Assets Held-for-sale [Member] | ||
Assets held for sale | ||
Real estate investments | 9,752 | 348,582 |
Acquired lease assets | 0 | 61,804 |
Other assets | 322 | 10,099 |
Total assets | 10,074 | 420,485 |
Liabilities related to assets held for sale | ||
Mortgage notes payable, net | 0 | 260,704 |
Below-market lease liabilities | 0 | 16,518 |
Other liabilities | 371 | 14,142 |
Total liabilities | 371 | 291,364 |
Net assets held for sale | $ 9,703 | $ 129,121 |
Dispositions, Assets Held for Sale, and Discontinued Operations (Schedule of Operating Results of Assets Held-for-sale Including in Discontinued Operations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Operating Results: | ||||
Interest expense | $ (16,909) | $ (7,728) | $ (38,862) | $ (13,998) |
Gain on extinguishment of debt | 0 | 0 | 1,930 | 0 |
Income from discontinued operations | 58 | 120 | 4,698 | 58 |
Discontinued Operations [Member] | ||||
Operating Results: | ||||
Revenues | 140 | 71 | 5,997 | (29) |
Operating expenses | (56) | 38 | (2,236) | 248 |
General and administrative expense | (26) | 11 | (38) | (161) |
Interest expense | 0 | 0 | (955) | 0 |
Gain on extinguishment of debt | 0 | 0 | 1,930 | 0 |
Income from discontinued operations | $ 58 | $ 120 | $ 4,698 | $ 58 |
Dispositions, Assets Held for Sale, and Discontinued Operations (Schedule of Significant Operating and Investing Noncash Items) (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Increase in cash and cash equivalents related to foreign currency translation | $ 131 | $ 33 |
Discontinued Operations [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Significant operating noncash items | (9,452) | 0 |
Increase in cash and cash equivalents related to foreign currency translation | 1,045 | 0 |
Total | $ (8,407) | $ 0 |
Real Estate Investments (Summary of Acquired Assets and Liabilities) (Details) - Chambers Street Properties [Member] $ in Thousands |
Dec. 17, 2015
USD ($)
|
---|---|
Assets | |
Land | $ 261,514 |
Buildings and improvements | 1,653,634 |
Net investments | 1,915,148 |
Cash and cash equivalents | 24,687 |
Restricted cash | 8,990 |
Unconsolidated equity investments | 561,752 |
Tenant and other receivables, net | 11,166 |
Acquired lease assets | 387,988 |
Deferred costs and other assets | 5,002 |
Assets held for sale | 412,565 |
Total assets | 3,327,298 |
Liabilities | |
Mortgage notes payable | 860,000 |
Revolving credit facilities and term loans | 216,754 |
Below-market lease liabilities | 40,593 |
Accounts payable, accrued expenses, and other liabilities | 87,434 |
Liabilities related to assets held for sale | 293,276 |
Total liabilities | 1,498,057 |
Estimated fair value of net assets acquired | $ 1,829,241 |
Debt Obligations (Senior Unsecured Notes) (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 17, 2015 |
Jan. 31, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Debt Instrument [Line Items] | ||||
Proceeds from unsecured term loans and revolving credit facility | $ 173,160 | $ 575,000 | ||
Notes Payable [Member] | Private Placement Senior Unsecured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Proceeds from unsecured term loans and revolving credit facility | $ 100,000 | $ 50,000 | ||
Interest Rate | 4.97% |
Leasing Agreements (Schedule of Future Minimum Rental Payments) (Details) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Leases, Operating [Abstract] | |
July 1 to December 31, 2016 | $ 183,381 |
2017 | 365,384 |
2018 | 348,757 |
2019 | 320,501 |
2020 | 286,879 |
Thereafter | 1,688,352 |
Total minimum lease rental income | $ 3,193,254 |
Fair Value Measurements (Narrative) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
Property
|
Jun. 30, 2015
USD ($)
Property
|
Jun. 30, 2016
USD ($)
Property
|
Jun. 30, 2015
USD ($)
Property
|
Dec. 31, 2015
USD ($)
Property
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Change in net unrealized gain (loss) on derivative instruments | $ | $ (11,460) | $ 1,468 | $ (33,649) | $ (664) | |
Number of real estate properties sold | 4 | 3 | 10 | 3 | |
Assets Held-for-sale [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Number of properties held-for-sale | 1 | 1 | 6 | ||
Number of real estate properties sold | 5 | ||||
Fair value, less costs to sell | $ | $ 9,752 | $ 9,752 | $ 393,984 |
Fair Value Measurements (Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation) (Details) - Fair Value, Inputs, Level 3 [Member] $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 3,442 |
Adjustments to fair value: | |
Ineffective portion of change in derivative instruments | (734) |
Unrealized loss on derivatives | 33,649 |
Ending balance | $ 36,357 |
Shareholders' Equity (Deficit) Shareholders' Equity (Deficit) (Common Stock Dividends) (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Mar. 31, 2016 |
|
Equity [Abstract] | ||
Common stock, dividends declared (in usd per share) | $ 0.11 | $ 0.110 |
Shareholders' Equity (Deficit) (Preferred Stock) (Narrative) (Details) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Series A Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares outstanding | 3,500,000 | 3,500,000 |
Preferred stock, redemption price per share (in usd per share) | $ 25 | |
7.125% Series A Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, dividend rate (in usd per share) | $ 1.78125 |
Shareholders' Equity (Deficit) (Deferred Stock Compensation Plan for Directors) (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | |
---|---|---|---|---|
Dec. 31, 2015 |
Jun. 30, 2015 |
Jun. 30, 2015 |
Jun. 30, 2016 |
|
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||
Cash awarded | $ 916 | |||
Phantom Share Units (PSUs) [Member] | ||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||
Grants in period (in shares) | 410,713 | |||
Unvested Restricted Stock [Member] | ||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||
Value of securities excluded from computation of EPS | 544,288 | 532,502 |
Shareholders' Equity (Deficit) (Schedule of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Equity [Abstract] | ||
Net unrealized loss on derivative securities | $ (39,723) | $ (6,074) |
Net unrealized gain on debt instruments | 1,977 | 1,010 |
Gain (loss) on non-derivative net investment hedge | (52) | 14 |
Other foreign currency translation adjustments | (3,157) | (656) |
Reclassification of accumulated foreign currency translation adjustments due to disposal | (3,737) | 0 |
Reclassification of swap gain (loss) into interest expense | 586 | (45) |
Total accumulated other comprehensive income (loss) | $ (44,106) | $ (5,751) |
Noncontrolling Interest (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
Dec. 17, 2015 |
|
Noncontrolling Interest [Line Items] | |||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Noncontrolling interest in operating partnership (in usd) | $ 10,559 | $ 10,892 | |
Noncontrolling interest in other partnerships | $ (394) | $ (249) | |
Operating Partnership Units [Member] | |||
Noncontrolling Interest [Line Items] | |||
Shares converted | 265,689 | 453,129 | |
Temporary equity, shares outstanding | 1,145,220 | ||
Capital shares reserved for future issuance | 1,145,220 | ||
Ownership percentage by noncontrolling owners | 0.27% | ||
Chambers Street Properties [Member] | |||
Noncontrolling Interest [Line Items] | |||
Shares issued to shareholders in acquisition | 3.1898 | ||
OP Units [Member] | Common Shares [Member] | |||
Noncontrolling Interest [Line Items] | |||
Shares converted | 1 |
Noncontrolling Interest (Noncontrolling Interest in the Operating Partnership) (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Balance at beginning of period | $ 10,892 |
Issuance of noncontrolling interests in the Company’s Operating Partnership | 0 |
Redemption of noncontrolling interests in the Company’s Operating Partnership | (2,204) |
Net loss attribution | 70 |
Fair value adjustments | 2,159 |
Dividends | (358) |
Balance at end of period | $ 10,559 |
Commitments and Contingencies (Schedule of Future Minimum Rental Payments) (Details) $ in Thousands |
Jun. 30, 2016
USD ($)
|
---|---|
Ground Leases - Operating | |
July 1 to December 31, 2016, operating | $ 889 |
2017, operating | 1,728 |
2018, operating | 1,731 |
2019, operating | 1,740 |
2020, operating | 1,732 |
Thereafter, operating | 48,062 |
Total minimum rent expense, operating | 55,882 |
Ground Leases - Capital | |
July 1 to December 31, 2016, capital | 0 |
2017, capital | 0 |
2018, capital | 0 |
2019, capital | 0 |
2020, capital | 0 |
Thereafter, capital | 329 |
Total minimum rent expense, capital | 329 |
Total | |
July 1 to December 31, 2016 | 889 |
2017 | 1,728 |
2018 | 1,731 |
2019 | 1,740 |
2020 | 1,732 |
Thereafter | 48,391 |
Total minimum rent expense | $ 56,211 |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 2,700 | $ 17 | $ 3,403 | $ 1,131 |
Segment Reporting (Narrative) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
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