Investments in Real Estate

9 Months Ended

Sep. 30, 2020

3. Investments in Real Estate

Investments in real estate, net consisted of the following ($ in thousands):

	September 30, 2020			December 31, 2019
Building and building improvements	$	23,302,061		$	20,950,147
Land and land improvements		6,506,128			5,639,678
Furniture, fixtures and equipment		439,981			377,645
Right of use asset - operating leases⁽¹⁾		114,535			114,011
Right of use asset - financing leases⁽¹⁾		56,008			56,008
Total		30,418,713			27,137,489
Accumulated depreciation and amortization		(1,549,499	)		(810,621	)
Investments in real estate, net	$	28,869,214		$	26,326,868

⁽¹⁾	Refer to Note 13 for additional details on the Company’s leases.

Acquisitions

During the nine months ended September 30, 2020, the Company acquired interests in 16 real estate investments for $3.5 billion, which were comprised of 80 industrial, 34 multifamily, six retail and 15 self-storage properties categorized as other.

The following table provides further details of the properties acquired during the nine months ended September 30, 2020 ($ in thousands):

Segments	Number of Transactions		Number of Properties		Sq. Feet (in thousands)/ Units/ Keys	Purchase Price⁽¹⁾
Multifamily properties		7		34	12,569 units	$	2,103,526
Industrial properties		6		80	11,776 sq. ft.		972,404
Retail properties		1		6	689 sq. ft.		287,392
Other properties		2		15	997 sq. ft.		114,395
		16		135		$	3,477,717

⁽¹⁾	Purchase price is inclusive of acquisition-related costs.

The following table summarizes the purchase price allocation for the properties acquired during the nine months ended September 30, 2020 ($ in thousands):

	Amount
Building and building improvements	$	2,329,887
Land and land improvements		935,344
Furniture, fixtures and equipment		44,329
In-place lease intangibles		183,885
Above-market lease intangibles		6,915
Below-market lease intangibles		(23,192	)
Other		549
Total purchase price		3,477,717
Assumed mortgage notes⁽¹⁾		224,123
Net purchase price	$	3,253,594

⁽¹⁾	Refer to Note 6 for additional details on the Company’s mortgage notes.

The weighted-average amortization periods for the acquired in-place lease intangibles, above-market lease intangibles and below-market lease intangibles of the properties acquired during the nine months ended September 30, 2020 were three, seven and four years, respectively.

Impairment

The Company reviews its real estate investments for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the GAAP depreciated cost basis of a real estate investment exceeds the undiscounted cash flows of such real estate investment, the investment is considered impaired and the GAAP depreciated cost basis is reduced to the fair value of the investment. During the three months ended September 30, 2020 the Company recognized a $6.2 million impairment charge on one of its hotel properties. During the nine months ended September 30, 2020, the Company recognized a $12.3 million impairment charge on two of its hotel properties. The impairment charges were a result of updates to the undiscounted cash flow assumptions to account for a decrease in occupancy, future cash flows, and the terminal value as a result of the COVID-19 pandemic. If the effects of the COVID-19 pandemic continue to adversely impact economic and market conditions or if the Company’s expected holding period for assets change, subsequent tests for impairment could result in additional impairment charges in the future. Certain investments within the Company’s portfolio, specifically its hotel assets, are more susceptible to future impairment considerations due to the significant declines in occupancy as a result of extended closures, decreases in travel and uncertainty around future cash flows. The Company can provide no assurance that material impairment charges with respect to the Company’s investments in real estate and unconsolidated entities will not occur during future periods. Accordingly, the Company will continue to monitor circumstances and events in future periods to determine whether any additional impairment charges are warranted. During the three and nine months ended September 30, 2019, the Company did not recognize an impairment charge.

Dispositions

The following tables provide details of the dispositions during the three and nine months ended September 30, 2020 and 2019 ($ in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2020						September 30, 2020
Segments	Number of Properties		Net Proceeds		Net Gain		Number of Properties		Net Proceeds		Net Gain
Multifamily properties⁽¹⁾		6	$	246,244	$	64,885		6	$	246,244	$	64,885
Hotel properties		1		134,537		35,185		1		134,537		35,185
Industrial properties		—		—		—		1		4,488		371
		7	$	380,781	$	100,070		8	$	385,269	$	100,441

	Three Months Ended						Nine Months Ended
	September 30, 2019						September 30, 2019
Segments	Number of Properties		Net Proceeds		Net Gain		Number of Properties		Net Proceeds		Net Gain
Hotel properties⁽²⁾		—	$	—	$	—		—	$	44,292	$	29,686
Industrial properties		1		30,276		6,481		1		30,276		6,481
		1	$	30,276	$	6,481		1	$	74,568	$	36,167

⁽¹⁾

In March 2020, a buyer of five of the Company’s multifamily properties terminated an initial agreement to acquire the five properties and forfeited the associated deposit in the amount of $8.0 million. The buyer subsequently entered into a new agreement to acquire the same five properties, and the sale closed during the three months ended September 30, 2020. For purposes of the Condensed Consolidated Statement of Cash Flows, the Company reclassified the forfeited deposit from operating activities to investing activities and is included in Net Proceeds above.

⁽²⁾	During the nine months ended September 30, 2019, the Company sold the parking garage attached to the Hyatt Place San Jose property. The sale did not include the Hyatt Place San Jose hotel or the land parcels under the hotel.

Properties Held for Sale

As of September 30, 2020, one multifamily property was classified as held for sale. Subsequent to September 30, 2020, the property was sold. As of December 31, 2019, six properties were classified as held for sale. One property was sold in January 2020 and five properties were sold in July 2020 as described above. The held for sale assets and liabilities are components of Other Assets and Other Liabilities, respectively, on the Condensed Consolidated Balance Sheets.

The following table is a summary of the assets and liabilities of the Company’s properties classified as held for sale ($ in thousands):

Assets:	September 30, 2020		December 31, 2019
Investments in real estate, net	$	36,877	$	141,344
Other assets		267		2,035
Total assets	$	37,144	$	143,379

Liabilities:
Mortgage notes	$	27,112	$	104,314
Other liabilities		1,086		4,097
Total liabilities	$	28,198	$	108,411