Real Estate Investments (Tables)

12 Months Ended

Dec. 31, 2019

Real Estate Investments, Net [Abstract]

Purchase Price of Acquired Properties

The following table summarizes the estimated fair value of the consideration transferred pursuant to the Merger and the estimated fair values of the assets acquired and liabilities assumed as of the Effective Time.

(In thousands)	RCA
Total Consideration:
Fair value of the Cash Consideration, including redemption of fractional shares, as defined in the Merger Agreement	$	94,504
Fair value of the Stock Consideration (1)	917,046
Fair value of the Partnership Merger Consideration	2
Fair value of the Class B Consideration	4,882
Fair value of the Total Merger Consideration	$	1,016,434
Assets Acquired at Fair Value
Land	$	282,063
Buildings, fixtures and improvements	1,079,944
Acquired intangible lease assets	178,634
Total real estate investments, at fair value	1,540,641
Cash and cash equivalents	21,922
Restricted cash	4,241
Prepaid expenses and other assets	18,959
Goodwill	1,605
Total assets acquired at fair value	1,587,368
Liabilities Assumed at Fair Value
Mortgage notes payable	127,651
Mortgage premiums	4,143
Credit facility	304,000
Market lease liabilities	104,840
Derivatives	203
Accounts payable and accrued expenses	21,291
Deferred rent and other liabilities	8,806
Total liabilities assumed at fair value	570,934
Net assets acquired	$	1,016,434

_________________________________

⁽¹⁾ 

Valued at $24.00 per share as of the date of the Merger.

The following table presents the allocation of assets acquired and liabilities assumed during the years ended December 31, 2019, 2018 and 2017. All acquisitions in 2019 and 2018 were considered asset acquisitions for accounting purposes. During 2017, prior to adoption of ASU No. 2017-01, Business Combinations (Topic 805) (See Note 3 — Summary of Significant Accounting Policies - Recent Accounting Pronouncements), all of the Company’s acquisitions, including the Merger, were accounted for as business combinations.

	Year Ended December 31,
(Dollars in thousands)	2019			2018			2017
Real estate investments, at cost:
Land	$	76,610		$	61,745		$	313,423
Buildings, fixtures and improvements	288,549			140,151			1,176,909
Total tangible assets	365,159			201,896			1,490,332
Acquired intangible assets and liabilities: [1]
In-place leases	66,787			39,978			177,152
Above-market lease assets	1,973			1,055			22,934
Below-market ground lease asset	—			—			1,233
Above-market ground lease liability	—			—			—
Below-market lease liabilities	(4,980		)	(1,157		)	(106,513		)
Total intangible assets, net	63,780			39,876			94,806
Prior Credit Facility assumed in the Merger	—			—			(304,000		)
Mortgage notes payable assumed in the Merger	—			—			(127,651		)
Premiums on mortgage notes payable assumed in the Merger	—			—			(4,143		)
Other assets acquired and (liabilities assumed) in the Merger, net	—			—			16,427
Consideration paid for acquired real estate investments, net of liabilities assumed	$	428,939		$	241,772		$	1,165,771
Number of properties purchased	218			130			110

^__________ 

^[1] 

Weighted-average remaining amortization periods for in-place leases, above-market lease assets, below-market ground lease asset, and below-market lease liabilities acquired during the year ended December 31, 2019 were 14.7 years, 11.6 years, and 16.8 years, respectively, as of each property’s respective acquisition date.

Business Acquisition, Pro Forma Information

The following table presents unaudited pro forma information as if the acquisitions, including the Merger, during the year ended December 31, 2017 had been consummated on January 1, 2016:

	Year Ended December 31,
(In thousands, except per share data)	2017[1]
Pro forma revenues	$	293,768
Pro forma net loss	$	(38,113	)
Basic and diluted pro forma net loss per share	$	(0.36	)

^__________ 

^[1] 

For the year ended December 31, 2017, aggregate revenues and net income derived from the Company’s 2017 acquisitions (for the Company’s period of ownership) were $121.3 million and $11.6 million, respectively.

Schedule of Intangible Assets and Goodwill

Total acquired intangible lease assets and liabilities consist of the following as of the dates presented:

	December 31, 2019						December 31, 2018
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets:
In-place lease assets	$	424,509	$	151,474	$	273,035	$	388,323	$	135,864	$	252,459
Above-market lease assets	23,666		8,152		15,514		24,392		7,477		16,915
Below-market ground lease assets [1]	—		—		—		1,233		60		1,173
Total acquired intangible lease assets	$	448,175	$	159,626	$	288,549	$	413,948	$	143,401	$	270,547
Intangible liabilities:
Above-market ground lease liability [1]	$	—	$	—	$	—	$	85	$	5	$	80
Below-market lease liabilities	106,435		22,394		84,041		107,401		17,543		89,858
Total acquired intangible lease liabilities	$	106,435	$	22,394	$	84,041	$	107,486	$	17,548	$	89,938

^__________ 

^[1] 

Upon adoption of ASC 842 effective January 1, 2019, intangible assets related to ground leases were reclassified to be included as part of Operating lease right-of-use assets presented on the Company’s consolidated balance sheet. See Note 3 — Summary of Significant Accounting Polices - Recently Issued Accounting Pronouncements for additional information.

Finite-lived Intangible Assets Amortization Expense

The following table presents amortization expenses and adjustments to revenue from tenants and property operating expenses for intangible assets and liabilities for the years ended December 31, 2019, 2018 and 2017:

	Year Ended December 31,
(In thousands)	2019			2018			2017
In-place leases, included in depreciation and amortization	$	44,795		$	54,439		$	68,477
Above-market lease intangibles	$	(3,375	)	$	(4,441	)	$	(6,007	)
Below-market lease liabilities	10,796			19,989			11,212
Total included in revenue from tenants	$	7,421		$	15,548		$	5,205
Below-market ground lease asset [1]	$	32		$	32		$	(28	)
Above-market ground lease liability [1]	(2		)	(2		)	(2		)
Total included in property operating expenses	$	30		$	30		$	(30	)

^__________ 

^[1] 

Upon adoption of ASC 842 effective January 1, 2019, intangible balances related to ground leases were reclassified to be included as part of the Operating lease right-of-use assets presented on the Company’s consolidated balance sheet with no change to placement of the amortization expense of such balances. See Note 3 — Summary of Significant Accounting Polices - Recently Issued Accounting Pronouncements for additional information.

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following table provides the projected amortization expenses and adjustments to revenue from tenants for intangible assets and liabilities for the next five years:

(In thousands)	2020			2021			2022			2023			2024
In-place leases, to be included in depreciation and amortization	$	39,025		$	34,988		$	31,041		$	28,634		$	25,944
Above-market lease intangibles	$	2,604		$	2,289		$	1,914		$	1,666		$	1,529
Below-market lease liabilities	(6,891		)	(6,324		)	(5,962		)	(5,801		)	(5,587		)
Total to be included in revenue from tenants	$	(4,287	)	$	(4,035	)	$	(4,048	)	$	(4,135	)	$	(4,058	)

Summary of Assets Held-for-Sale

The following table details the major classes of assets associated with the properties that have been reclassified as held for sale as of December 31, 2019 and 2018:

	December 31,
(In thousands)	2019			2018
Real estate investments held for sale, at cost:
Land	$	563		$	6,113
Buildings, fixtures and improvements	750			39,343
Acquired intangible lease assets	—			12,517
Total real estate assets held for sale, at cost	1,313			57,973
Less accumulated depreciation and amortization	(137		)	(11,278		)
Total real estate investments held for sale, net	1,176			46,695
Impairment charges related to properties reclassified as held for sale [1]	—			(2,176		)
Assets held for sale	$	1,176		$	44,519

^__________ 

^[1] 

Impairment charges are recorded in the period in which an asset is reclassified to held for sale.