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Investments (Tables)

6 Months Ended

Jun. 30, 2020

Investments [Abstract]

Schedule of Information about Acquisition Activity

The following table presents information about the Company’s acquisition activity during the six months ended June 30, 2020:


(Dollar amounts in thousands)						Total Investments
Ownership type						Fee Interest
Number of properties acquired						73

Allocation of Purchase Price:
Land and improvements						$	63,100
Building and improvements						114,469
Construction in progress ⁽¹⁾						9,641
Intangible lease assets						3,094
Assets acquired						190,304

Intangible lease liabilities						—
Liabilities assumed						—
Purchase price (including acquisition costs)						$	190,304

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(1)Represents amounts incurred at and subsequent to acquisition and includes $0.2 million of capitalized interest expense.

The following table presents information about the Company’s acquisition activity during the six months ended June 30, 2019:


(Dollar amounts in thousands)						Total Investments
Ownership type						Fee Interest
Number of properties acquired						137

Allocation of Purchase Price:
Land and improvements						$	96,418
Building and improvements						175,074
Construction in progress ⁽¹⁾						5,754
Intangible lease assets						10,338
Assets acquired						287,584

Intangible lease liabilities						(117)
Liabilities assumed						(117)
Purchase price (including acquisition costs)						$	287,467

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(1)Represents amounts incurred at and subsequent to acquisition and includes $0.1 million of capitalized interest.

Schedule of Gross Investment Activity

During the six months ended June 30, 2020 and 2019, the Company had the following gross investment activity:


(Dollar amounts in thousands)						Number of Investment Locations						Dollar Amount of Investments
Gross investments, January 1, 2019						677						$	1,394,549
Acquisitions of and additions to real estate investments ⁽¹⁾						137						290,943
Sales of investments in real estate						(18)						(35,383)
Relinquishment of properties at end of ground lease term						(1)						(241)
Provisions for impairment of real estate ⁽²⁾												(1,921)
Investments in loans receivable						5						23,566
Principal collections on direct financing lease receivables						(11)						(10,412)
Other												(866)
Gross investments, June 30, 2019												1,660,235
Less: Accumulated depreciation and amortization ⁽³⁾												(69,010)
Net investments, June 30, 2019						789						$	1,591,225

Gross investments, January 1, 2020						1,000						$	2,002,314
Acquisitions of and additions to real estate investments						73						207,774
Sales of investments in real estate						(13)						(21,882)
Relinquishment of properties at end of ground lease term						(3)						(1,931)
Provisions for impairment of real estate ⁽⁴⁾												(1,859)
Investments in loans receivable						3						9,656
Principal collections on loans and direct financing lease receivables												(130)
Other												(1,328)
Gross investments, June 30, 2020												2,192,614
Less: Accumulated depreciation and amortization ⁽³⁾												(113,235)
Net investments, June 30, 2020						1,060						$	2,079,379

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(1)During the six months ended June 30, 2019, the Company acquired nine properties that had secured one of its loans receivable for an aggregate purchase price of $8.2 million. This loan receivable had a carrying value of $5.7 million prior to our acquisition of the mortgaged properties.

(2)During the six months ended June 30, 2019, the Company identified and recorded provisions for impairment at 1 vacant and 5 tenanted properties.

(3)Includes $92.9 million and $53.0 million of accumulated depreciation as of June 30, 2020 and 2019, respectively.

(4)During the six months ended June 30, 2020, the Company identified and recorded provisions for impairment at 4 vacant properties and 1 tenanted property.

Schedule of Loans Receivable

The Company’s loans receivable as of June 30, 2020 and December 31, 2019 are summarized as follows (dollar amounts in thousands):


																														Principal Balance Outstanding
Loan Type						Monthly Payment						Number of Secured Properties						Interest Rate						Maturity Date						June 30, 2020						December 31, 2019
Mortgage ⁽¹⁾⁽²⁾						Interest only						2						8.80%						2039						$	12,000					$	12,000
Mortgage ⁽²⁾						Principal + Interest						2						8.10%						2059						6,125						5,125
Mortgage ⁽¹⁾						Interest only						2						8.53%						2039						7,300						7,300
Mortgage ⁽¹⁾						Interest only						69						8.16%						2034						28,000						28,000
Mortgage ⁽¹⁾						Interest only						18						8.05%						2034						34,604						34,604
Mortgage ⁽¹⁾						Interest only						1						8.42%						2040						5,300						—
Leasehold interest ⁽³⁾						Principal + Interest						2						10.69%						2039						1,435						1,435
Leasehold interest ⁽⁴⁾						Principal + Interest						1						2.25%						2034						1,137						1,164
Leasehold interest ⁽⁴⁾						Principal + Interest						1						2.41%						2034						1,685						—
Leasehold interest ⁽⁴⁾						Principal + Interest						1						4.97%						2038						$	1,625					—
Net investment																														$	99,211					$	89,628

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(1)Loan requires monthly payments of interest only with a balloon payment due at maturity.

(2)Loan allows for prepayments in whole or in part without penalty.

(3)This leasehold interest is accounted for as a loan receivable, as the lease for two land parcels contains an option for the lessee to repurchase the leased parcels in 2024 or 2025.

(4)These leasehold interests are accounted for as loans receivable, as the leases for each property contain an option for the relevant lessee to repurchase the leased property in the future.

Scheduled Principal Payments Due under Loans Receivable

Scheduled principal payments due under the Company’s loans receivable as of June 30, 2020 were as follows:


(in thousands)						Loans Receivable
July 1 - December 31, 2020						$	98
2021						207
2022						220
2023						236
2024						252
Thereafter						98,198
Total						$	99,211

Schedule of Direct Financing Lease Receivables

The components of the investments accounted for as direct financing lease receivables were as follows:


(in thousands)						June 30, 2020						December 31, 2019
Minimum lease payments receivable						$	3,698					$	3,866
Estimated unguaranteed residual value of leased assets						270						270
Unearned income from leased assets						(1,467)						(1,581)
Net investment						$	2,501					$	2,555

Scheduled Future Minimum Non-cancelable Base Rental Payments Under Direct Financing Lease Receivables

Scheduled future minimum non-cancelable base rental payments due to be received under the direct financing lease receivables as of June 30, 2020 were as follows:


(in thousands)						Future Minimum Base Rental Payments
July 1 - December 31, 2020						$	169
2021						340
2022						345
2023						347
2024						289
Thereafter						2,208
Total						$	3,698

Summary of Changes to Allowance for Loan Losses

For the six months ended June 30, 2020, the changes to allowance for loan losses were as follows:


(in thousands)						Loans and Direct Financing Lease Receivables
Balance at December 31, 2019						$	—
Cumulative-effect adjustment upon adoption of ASC 326						188
Current period provision for expected credit losses ⁽¹⁾						516
Write-offs charged						—
Recoveries						—
Balance at June 30, 2020						$	704

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(1)The increase in expected credit losses is due to the changes in assumptions regarding current macroeconomic factors related to COVID-19.

Summary of Significant Credit Quality Indicators Measured at Amortized Cost

The significant credit quality indicators for the Company’s loans and direct financing lease receivables measured at amortized cost, were as follows as of June 30, 2020:


						Amortized Cost Basis by Origination Year
(in thousands)						2020						2019						2018						2017						2016						Total Amortized Costs Basis
Credit Quality Indicator:
LTV <60%						$	—					$	28,000					$	—					$	—					$	832					$	28,832
LTV 60%-70%						—						34,604						—						—						1,100						35,704
LTV >70%						8,611						27,997						—						—						883						37,491
						$	8,611					$	90,601					$	—					$	—					$	2,815					$	102,027

Activity in Real Estate Investments and Intangible Lease Liabilities Held for Sale

The following table shows the activity in real estate investments held for sale and intangible lease liabilities held for sale during the six months ended June 30, 2020 and 2019.


(Dollar amounts in thousands)						Number of Properties						Real Estate Investments						Intangible Lease Liabilities						Net Carrying Value
Held for sale balance, December 31, 2018						—						$	—					$	—					$	—
Transfers to held for sale classification						2						3,765						—						3,765
Sales						—						—						—		%				—
Transfers to held and used classification						—						—						—		%				—
Held for sale balance, June 30, 2019						2						$	3,765					$	—					$	3,765

Held for sale balance, December 31, 2019						1						$	1,211					$	—					$	1,211
Transfers to held for sale classification						2						1,792						—						1,792
Sales						(1)						$	(1,211)					$	—					$	(1,211)
Transfers to held and used classification						—						—						—						—
Held for sale balance, June 30, 2020						2						$	1,792					$	—					$	1,792

Schedule of External Customers by Geographic Areas

The following table lists the states where the rental revenue from the properties in that state during the periods presented represented 10% or more of total rental revenue in the Company’s consolidated statements of operations:


						Three months ended June 30,																		Six months ended June 30,
State						2020						2019						2020						2019
Texas						12.9%						12.2%						12.6%						12.4%
Georgia						10.5%						11.3%						10.7%						11.2%

Schedule of Intangible Assets and Liabilities

Intangible assets and liabilities consisted of the following as of the dates presented:


						June 30, 2020																														December 31, 2019
(in thousands)						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Intangible assets:
In-place leases						$	66,533					$	16,659					$	49,874					$	64,828					$	14,195					$	50,633
Intangible market lease assets						12,644						3,944						8,700						14,094						4,228						9,866
Total intangible assets						$	79,177					$	20,603					$	58,574					$	78,922					$	18,423					$	60,499

Intangible market lease liabilities						$	11,866					$	2,737					$	9,129					$	12,054					$	2,490					$	9,564

Summary of Remaining Weighted Average Amortization Periods for Intangible Assets and Liabilities

The remaining weighted average amortization periods for the Company’s intangible assets and liabilities as of June 30, 2020, by category and in total, were as follows:


			Years Remaining
In-place leases			10.1
Intangible market lease assets			15.4
Total intangible assets			10.8

Intangible market lease liabilities			15.4

Summary of Amortization and Accretion Recognized

The following table discloses amounts recognized within the consolidated statements of operations related to amortization of in-place leases, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases for the periods presented:


						Three months ended June 30,																		Six months ended June 30,
(in thousands)						2020						2019						2020						2019
Amortization of in-place leases ⁽¹⁾						$	1,846					$	1,551					$	3,525					$	2,883
Amortization (accretion) of market lease intangibles, net ⁽²⁾						517						200						597						444
Amortization (accretion) of above- and below-market ground lease intangibles, net ⁽³⁾						91						—						213						—

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(1)Reflected within depreciation and amortization expense.

(2)Reflected within rental revenue.

(3)Reflected within property expenses.

Summary of Projected Amortization Expenses for Next Five Years

The following table provides the projected amortization of in-place lease assets to depreciation and amortization expense and net amortization of above- and below-market lease intangibles to rental revenue for the next five years:


(in thousands)						July 1 - December 31, 2020						2021						2022						2023						2024
In-place lease assets						$	1,661					$	3,197					$	3,095					$	2,987					$	2,736
Adjustment to amortization expense						$	1,661					$	3,197					$	3,095					$	2,987					$	2,736

Above-market lease assets						$	(402)					$	(796)					$	(795)					$	(764)					$	(731)
Below-market lease liabilities						264						530						531						485						483
Net adjustment to rental revenue						$	(138)					$	(266)					$	(264)					$	(279)					$	(248)