Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance subject to deductible requirements. Management believes that the ultimate settlement of these actions will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

The Company is subject to a one-time incentive fee based on aggregate performance thresholds of the acquired buildings sourced by Columbus Nova Real Estate Acquisition Group, LLC. The measurement period for the incentive fee ended on May 31, 2017. The final valuation of the incentive fee is subject to three independent appraisals and is expected to be finalized during the three months ending September 30, 2017. As of June 30, 2017 and December 31, 2016, the estimated fair value of the incentive fee was approximately $0.9 million and $0, respectively, and is included in accounts payable, accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets. Incentive fee expense of approximately $0.9 million, $0.9 million, $0, and $0 for the three and six months ended June 30, 2017 and June 30, 2016, respectively, is included in other expenses on the accompanying Consolidated Statements of Operations. The estimated fair value as of June 30, 2017 was calculated using the direct cap method under the income approach using capitalization rates of 6.5% to 9.25%, which are Level 3 inputs. The estimated fair value as of December 31, 2016 was calculated using the discounted cash flow method under the income approach using the following Level 3 inputs: discount rates of 8.0% to 12.0% and exit capitalization rates of 7.0% to 12.0%.

The Company has letters of credit of approximately $5.6 million as of June 30, 2017 related to development projects and certain lease agreements in which the Company is the lessee.