Equity and Non-Controlling Interest

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Equity and Non-Controlling Interest

Equity and Non-Controlling Interest

Authorized Capital

As of June 30, 2023, the Company had the authority to issue an unlimited number of preferred shares and three classes of common shares including Class I shares, Class D shares, and Class S shares. Each class of common shares and preferred shares has a par value of $0.01. The Company’s Board of Trustees has the ability to establish the preferences and rights of each class or series of preferred shares, without shareholder approval, and as such, it may afford the holders of any series or class of preferred shares preferences, powers and rights senior to the rights of holders of common shares. The differences among the common share classes relate to upfront transaction fees and ongoing shareholder servicing fees. See Note 2 – Summary of Significant Accounting Policies and Estimates for a further description of such items. Other than the differences in upfront transaction fees and ongoing shareholder servicing fees, each class of common shares has the same economic and voting rights.

Common Shares

The following table details the movement in the Company’s outstanding shares of common shares (in thousands, except share amounts):

	Three Months Ended June 30, 2023
	Class I	Class D	Class S	Total
March 31, 2023	49,520,231	2,699,163	55,141,062	107,360,456
Common shares issued	15,306,453	851,101	10,402,555	26,560,109
Distribution reinvestment	405,459	21,127	450,835	877,421
Common shares repurchased	(892,808)	(229,729)	(566,711)	(1,689,248)
June 30, 2023	64,339,335	3,341,662	65,427,741	133,108,738

	Six Months Ended June 30, 2023
	Class I	Class D	Class S	Total
December 31, 2022	31,668,259	1,385,421	43,401,686	76,455,366
Common shares issued	32,917,680	2,152,550	21,970,965	57,041,195
Distribution reinvestment	661,139	33,420	815,560	1,510,119
Common shares repurchased	(907,743)	(229,729)	(760,470)	(1,897,942)
June 30, 2023	64,339,335	3,341,662	65,427,741	133,108,738

Redeemable Common Shares

In connection with the Company’s payment of its Affiliate line of credit and management fee, the Adviser holds Class I Common Shares. See Note 7 – Debt for further details of the affiliate line of credit and Note 9 – Related Party Transactions for further details on the management fee. The Adviser and BO Lender have the ability to redeem the Class I shares for cash at their election, therefore the Company has classified these Class I shares as Redeemable common shares outside of equity on the Company’s Condensed Consolidated Balance Sheet. As of June 30, 2023 and December 31, 2022, we have issued 1,754,785 and 229,300 redeemable common shares, respectively.

The Redeemable common shares are recorded at the greater of (i) their issuance amount, or (ii) their redemption value, which is equivalent to the fair value of the shares at the end of each measurement period. Accordingly, the Company recorded an allocation adjustment of $145 and $142 during the three and six months ended June 30, 2023.

Share and Unit Repurchases

The Company adopted a share repurchase plan whereby, subject to certain limitations, from January 2023 through June 2023, shareholders may request, on a monthly basis, that the Company repurchases all or any portion of their shares. Shares are repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any early repurchase deduction. For any shares held for less than one year, the Board waived the 2% penalty that would have otherwise applied to the redemption value to shareholders. The total amount of aggregate repurchases of Class S, Class D, and Class I shares (excluding any early repurchase deduction) is limited to 2% of the aggregate NAV per month (measured using the aggregate NAV as of the end of the immediately preceding month) and 5% of the aggregate NAV per calendar quarter (measured using the aggregate NAV as of the end of the immediately preceding quarter).

Other than as described for Redeemable Common Shares and Redeemable Non-Controlling Interests, the Company is not obligated to repurchase any shares and could choose to repurchase fewer shares than were requested to be repurchased, or none at all. Further, the Board may modify and suspend the Company’s share repurchase plan if it deems such action to be in the Company’s best interest and the best interest of its shareholders. In the event that the Company determined to repurchase some but not all of the shares submitted for repurchase during any month, shares repurchased at the end of the month would be repurchased on a pro rata basis. The Company adopted a New Repurchase Plan (as defined below), effective July 1, 2023. Refer to Note 14 for details on the Company’s New Repurchase Plan.

For the three months ended June 30, 2023, the Company repurchased 1,689,248 shares of common shares and 101,458 Operating Partnership Units for a total of $17,201 and $1,034, respectively. For the six months ended June 30, 2023, the Company repurchased 1,897,942 shares of common shares and 2,158,725 Operating Partnership Units for a total of $19,343 and $21,992, respectively. The Company had no unfulfilled repurchase requests during the six months ended June 30, 2023.

Distributions

The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its shareholders each year to comply with the REIT provisions of the Internal Revenue Code. Each class of common shares receive the same gross distribution per share. The net distribution varies for each class based on the applicable shareholder servicing fee, which is deducted from the monthly distribution per share and paid directly to the applicable distributor.

The following table details the aggregate distributions declared for each applicable class of common shares:

	Three Months Ended June 30, 2023
	Class I		Class D		Class S
Aggregate gross distributions declared per share of common shares	$	0.1750	$	0.1750	$	0.1750
Shareholder servicing fee per share of common shares	—		(0.0063)		(0.0216)
Net distributions declared per share of common shares	$	0.1750	$	0.1687	$	0.1534

	Six Months Ended June 30, 2023
	Class I		Class D		Class S
Aggregate gross distributions declared per share of common shares	$	0.3500	$	0.3500	$	0.3500
Shareholder servicing fee per share of common shares	—		(0.0126)		(0.0433)
Net distributions declared per share of common shares	$	0.3500	$	0.3374	$	0.3067

The Company has adopted a distribution reinvestment plan whereby shareholders will have their cash distributions automatically reinvested in additional common shares unless they elect to receive their distributions in cash. The per share purchase price for shares purchased pursuant to the distribution reinvestment plan will be equal to the transaction price at the time the distribution is payable. Shareholders will not pay an upfront transaction fee when purchasing shares pursuant to the distribution reinvestment plan. The ongoing servicing fees with respect to shares of Class D shares and Class S shares are calculated based on the NAV for those shares and may reduce the NAV.

Redeemable Non-controlling Interest

In connection with its performance participation interest, the Special Limited Partner holds Class I units in NLT OP. See Note 9 for further details of the Special Limited Partner’s performance participation interest. Because the Special Limited Partner has the ability to redeem its Class I units for Class I shares in the Company or cash, at the election of the Special Limited Partner, the Company has classified these Class I units as Redeemable Non-controlling Interest in mezzanine equity on the Company’s Condensed Consolidated Balance Sheet.

The following table details the redeemable non-controlling interest activity related to the Special Limited Partner for the six months ended June 30, 2023:

	Six Months Ended June 30, 2023
Balance at the beginning of the year	$	1,657
Settlement of prior year performance participation allocation	2,504
Repurchases	—
Conversion to Class I shares	—
GAAP income allocation	64
Other comprehensive income	76
Distributions	(128)
Fair value allocation	5
Reallocation between additional paid-in capital and non-controlling interests due to changes in NLT OP ownership	54
Ending Balance	$	4,232

During the six months ended June 30, 2023, the Company issued Class I units in NLT OP to the Special Limited Partner as payment of the performance participation allocation. No units were subsequently redeemed for cash or exchanged for Class I shares in the Company during the period.

The Redeemable Non-controlling Interests are recorded at the greater of (i) their carrying amount, adjusted for their share of the allocation of GAAP net income or loss and distributions, or (ii) their redemption value, which is equivalent to the fair value of such interests at the end of each measurement period. Accordingly, the Company recorded an allocation adjustment of $(10) and $5 during the three and six months ended June 30, 2023, respectively, between Additional Paid-in Capital and Redeemable Non-controlling Interest.

Share-Based Compensation

We awarded independent members of the Board 16,397 shares of restricted Class I shares subject to a vesting period of 13.5 months and recognized approximately $84 and $168 of compensation expense for the three and six months ended, respectively, related to these awards.