Real Estate, Operating Real Estate, Real Estate Under Construction, and Equity Investment in Real Estate (Tables)

12 Months Ended

Dec. 31, 2021

Real Estate [Abstract]

Schedule of real estate properties

Real estate, which consists of land and buildings leased to others, which are subject to operating leases, is summarized as follows (in thousands):

	December 31,
	2021 (a)		2020
Land	$	264,590	$	235,243
Buildings and improvements	1,248,664		1,205,111
Less: Accumulated depreciation	(199,664)		(172,319)
	$	1,313,590	$	1,268,035

_________

(a)Amounts include four recently completed student housing properties located in Spain and Portugal (subject to net lease agreements), as further described in the “Real Estate Under Construction” section below.

Operating real estate, which consists of our self-storage, student housing (not subject to net lease agreements), and multi-family residential properties (our last multi-family residential property was sold on January 29, 2019), is summarized as follows (in thousands):

	December 31,
	2021		2020
Land	$	80,481	$	89,148
Buildings and improvements	397,107		507,850
Less: Accumulated depreciation	(80,035)		(73,569)
	$	397,553	$	523,429

Schedule of real estate under construction

The following table provides the activity of our Real estate under construction (in thousands):

	Years Ended December 31,
	2021		2020
Beginning balance	$	180,055	$	235,751
Placed into service	(171,413)		(236,923)
Capitalized funds	97,099		153,539
Foreign currency translation adjustments	(7,850)		19,415
Capitalized interest	5,418		8,273
Ending balance	$	103,309	$	180,055

During the year ended December 31, 2021, we completed and placed into service the following student housing properties, which became subject to individual net lease agreements with minimum fixed rents and were reclassified to Real estate — Land, buildings and improvements on our consolidated balance sheets (in thousands):

Property Location(s)	Date of Completion	Total Capitalized Costs (a) (b)
Coimbra, Portugal	7/5/2021	$	35,096
Pamplona, Spain	7/8/2021	32,781
Seville, Spain	7/30/2021	46,593
Bilbao, Spain	8/24/2021	56,719
		$	171,189

___________

(a)Amounts include capitalized interest, carrying costs, and acquisition fees payable to our Advisor (Note 3).

(b)Amounts reflect the exchange rate of the euro on the date the assets were placed into service.

During the year ended December 31, 2020, we completed and placed into service the following student housing properties (in thousands):

Property Location(s)	Reclassified to	Date of Completion	Total Capitalized Costs (a) (b)
Austin, Texas	Operating real estate — Land, buildings and improvements	8/4/2020	$	78,927
Barcelona, Spain (c)	Real estate — Land, buildings and improvements	8/4/2020	33,429
San Sebastian, Spain (c)	Real estate — Land, buildings and improvements	8/20/2020	38,532
Porto, Portugal (d)	Real estate — Land, buildings and improvements	10/30/2020	28,809
Malaga, Spain (d)	Real estate — Land, buildings and improvements	12/10/2020	50,975
			$	230,672

___________

(a)Amounts include capitalized interest and acquisition fees payable to our Advisor (Note 3).

(b)Amounts related to our international student housing properties are denominated in a foreign currency. For these properties, amounts reflect the euro on the date the assets were placed into service.

(c)Upon completion, these properties became subject to individual net lease agreements with minimum fixed rents.

(d)Upon completion, these properties became subject to an individual net lease agreement with variable rent based on gross revenues, which converted to minimum fixed rent in the second year of operation.

Schedule of operating lease income

Lease income recognized and included within Lease revenues — net-leased and Lease revenues — operating real estate in the consolidated statements of income are as follows (in thousands):

	Years Ended December 31,
	2021		2020		2019
Lease revenues — net-leased
Lease income — fixed	$	101,944	$	84,047	$	99,771
Lease income — variable (a)	18,237		15,096		15,468
Total operating lease income (b)	$	120,181	$	99,143	$	115,239
Lease revenues — operating real estate
Lease income — fixed	$	78,726	$	67,964	$	67,969
Lease income — variable (c)	2,416		2,218		2,620
Total operating real estate income	$	81,142	$	70,182	$	70,589

_________

(a)Includes (i) rent increases based on changes in the CPI and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.

(b)Excludes interest income from direct financing leases of $1.5 million, $3.2 million, and $3.9 million for the years ended December 31, 2021, 2020, and 2019, respectively (Note 5). Interest income from direct financing leases is included in Lease revenues — net-leased in the consolidated statements of income.

(c)Primarily comprised of late fees and administrative fees.

Schedule of future minimum rents

Scheduled future lease payments to be received (exclusive of expenses paid by tenants, percentage rents, and future CPI-based adjustments) under non-cancelable operating leases as of December 31, 2021 are as follows (in thousands):

Years Ending December 31,	Total
2022	$	114,185
2023	107,886
2024	97,357
2025	92,530
2026	84,796
Thereafter	664,191
Total	$	1,160,945

Supplemental balance sheet

Supplemental balance sheet information related to ROU assets and lease liabilities is as follows (dollars in thousands):

		Years Ended December 31,
	Location on Consolidated Balance Sheets	2021			2020
Operating ROU assets — land leases	In-place lease and other intangible assets	$	34,496		$	37,339
Operating lease liabilities — land leases	Accounts payable, accrued expenses and other liabilities	$	7,287		$	8,084
Weighted-average remaining lease term — operating leases (a)		42.5 years			42.2 years
Weighted-average discount rate — operating leases (a)		6.8		%	6.8		%
Number of land lease arrangements		8			8
Lease term range		4 – 981 years			5 – 982 years

___________

(a)Excludes ROU land lease asset totaling $7.4 million and $7.5 million as of December 31, 2021, and 2020, related to the student housing development project located in Swansea, United Kingdom, as it has no future obligation during the 983-year lease term.

Undiscounted cash flows

A reconciliation of the undiscounted cash flows for operating leases recorded on the consolidated balance sheet within Accounts payable, accrued expenses and other liabilities as of December 31, 2021 is as follows (in thousands):

Years Ending December 31,	Total
2022	$	596
2023	596
2024	596
2025	591
2026	480
Thereafter	18,833
Total lease payments	21,692
Less: amount of lease payments representing interest	(14,405)
Present value of future lease payments/lease obligations	$	7,287