Investments in Real Estate (Tables)

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Schedule of acquisitions

Below is a summary of our acquisitions for the nine months ended September 30, 2022:

	Number of Properties	Leasable Square Feet (in thousands)	Investment ($ in millions)		Weighted Average Lease Term (Years)	Initial Weighted Average Cash Lease Yield (1)
Nine months ended September 30, 2022 (2)
Acquisitions - U.S.	561	9,396	$	2,623.6	15.1	5.9	%
Acquisitions - Europe	78	8,904	2,058.6		8.9	5.8	%
Total acquisitions	639	18,300	$	4,682.2	12.5	5.9	%
Properties under development (3)	127	3,201	416.4		15.6	5.6	%
Total (4)	766	21,501	$	5,098.6	12.7	5.8	%

(1)The initial weighted average cash lease yield for a property is generally computed as estimated contractual first year cash net operating income, which, in the case of a net leased property, is equal to the aggregate cash base rent for the first full year of each lease, divided by the total cost of the property. Since it is possible that a client could default on the payment of contractual rent, we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above. Contractual net operating income used in the calculation of initial weighted average cash yield includes approximately $8.0 million received as settlement credits as reimbursement of free rent periods for the nine months ended September 30, 2022.

In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return. When the lease does not provide for a fixed rate of return on a property under development or expansion, the initial weighted average cash lease yield is computed as follows: estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs.

(2)None of our investments during the nine months ended September 30, 2022, caused any one client to be 10% or more of our total assets at September 30, 2022.

(3)Includes five U.K. development properties that represent an investment of £36.6 million Sterling during the nine months ended September 30, 2022, converted at the applicable exchange rate on the funding date.

(4)Our clients occupying the new properties are 90.6% retail, 9.3% industrial and 0.1% other property types, based on rental revenue. Approximately 30% of the rental revenue generated from acquisitions during the nine months ended September 30, 2022, is from investment grade rated clients, their subsidiaries or affiliated companies.

Below is a summary of our acquisitions for the nine months ended September 30, 2021:

	Number of Properties	Leasable Square Feet (in thousands)	Investment ($ in millions)		Weighted Average Lease Term (Years)	Initial Weighted Average Cash Lease Yield (1)
Nine months ended September 30, 2021 (2)
Acquisitions - U.S.	415	9,227	$	2,073.1	13.8	5.5	%
Acquisitions - Europe	71	5,217	1,520.8		10.5	5.5	%
Total acquisitions	486	14,444	$	3,593.9	12.4	5.5	%
Properties under development - U.S. (3)	50	2,127	182.0		15.8	5.9	%
Total (4)	536	16,571	$	3,775.9	12.6	5.5	%

(1)Contractual net operating income used in the calculation of initial weighted average cash yield includes approximately $3.2 million received as settlement credits as reimbursement of free rent periods for the nine months ended September 30, 2021.

(2)None of our investments during the nine months ended September 30, 2021, caused any one client to be 10% or more of our total assets at September 30, 2021.

(3)Includes one U.K. development property that represents an investment of £4.7 million Sterling during the nine months ended September 30, 2021, converted at the applicable exchange rate on the funding date.

(4) Our clients occupying the new properties are 80.2% retail and 19.8% industrial, based on rental revenue. Approximately 43% of the rental revenue generated from acquisitions during the nine months ended September 30, 2021, was from investment grade rated clients, their subsidiaries or affiliated companies.

Schedule allocation of acquisitions

The acquisitions during the nine months ended September 30, 2022, which had no associated contingent consideration, were allocated as follows (in millions):

	Acquisitions - U.S.		Acquisitions - U.K.		Acquisitions - Spain
Nine months ended September 30, 2022	(USD)		(£ Sterling)		(€ Euro)
Land (1)	$	729.4	£	595.7	€	63.2
Buildings and improvements	1,572.1		556.8		80.5
Lease intangible assets (2)	305.5		210.0		12.4
Other assets (3)	386.6		203.2		8.7
Lease intangible liabilities (4)	(72.3)		(54.3)		(1.1)
Other liabilities (5)	(21.8)		(2.4)		—
	$	2,899.5	£	1,509.0	€	163.7

(1) U.K. land includes £43.5 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 10.9 years.

(3) U.S. other assets consists of $353.8 million of financing receivables with above-market terms and $32.8 million of right-of-use assets accounted for as finance leases. U.K. other assets consists of £15.9 million of financing receivables with above-market terms, £184.9 million of right-of-use assets accounted for as finance leases and £2.4 million of right-of-use assets accounted for as operating leases. Spain other assets consists entirely of financing receivables with above-market terms.

(4) The weighted average amortization period for acquired lease intangible liabilities is 13.8 years.

(5) U.S. other liabilities consists of $15.3 million of deferred rent on certain below-market leases, $8.6 million of lease liabilities under financing leases, offset by $2.1 million of mortgage discounts. U.K. other liabilities consists entirely of lease liabilities under operating leases.

The acquisitions during the nine months ended September 30, 2021, which had no associated contingent consideration, were allocated as follows (in millions):

	Acquisitions - U.S.		Acquisitions - U.K.		Acquisitions - Spain
Nine months ended September 30, 2021	(USD)		(£ Sterling)		(€ Euro)
Land (1)	$	596.8	£	292.3	€	36.7
Buildings and improvements	991.0		529.6		36.3
Lease intangible assets (2)	349.8		179.7		23.2
Other assets (3)	372.6		25.9		—
Lease intangible liabilities (4)	(46.7)		(6.4)		—
Other liabilities (5)	(122.3)		(0.3)		—
	£	2,141.2	£	1,020.8	£	96.2

(1) U.K land includes £1.3 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 13.1 years.

(3) U.S. other assets consists of $68.2 million of financing receivables with above-market terms, $39.1 million of right-of-use assets accounted for as finance leases, $5.8 million in investments in sales-type leases, and $259.5 million of right of use assets under ground leases. U.K. other assets consists of £4.3 million of financing receivables with above-market terms and £21.7 million of right-of-use assets accounted for as finance leases.

(4) The weighted average amortization period for acquired lease intangible liabilities is 18.6 years.

(5) U.S. other liabilities consists of $21.6 million of deferred rent on certain below-market leases and $100.7 million of lease liabilities under ground leases. U.K other liabilities consists entirely of a mortgage premium.

Schedule of future impact related to amortization of above-market, below-market and in-place lease intangibles

The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease intangibles at September 30, 2022 (dollars in thousands):

	Net increase (decrease) to rental revenue		Increase to amortization expense
2022	$	(14,280)	$	153,081
2023	(56,378)		556,569
2024	(50,221)		495,063
2025	(43,921)		425,927
2026	(35,870)		379,544
Thereafter	309,356		1,794,299
Totals	$	108,686	$	3,804,483

Schedule of properties sold

The following table summarizes our properties sold during the periods indicated below, excluding our proportionate share of net proceeds from the disposition of properties by our unconsolidated industrial partnerships (dollars in millions):

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Number of properties	34		27		138		96
Net sales proceeds	$	142.2	$	31.9	$	414.4	$	123.5
Gain on sales of real estate	$	42.6	$	12.1	$	93.4	$	35.4

Schedule of investment in unconsolidated entities

The following is a summary of our investments in unconsolidated entities as of September 30, 2022 (in thousands):

	Ownership % (1)		Number of Properties	Carrying Amount of Investment as of				Equity in income and impairment of investment in unconsolidated entities for the nine months ended(2)
Investment(2)	September 30, 2022			September 30, 2022		December 31, 2021		September 30, 2022		September 30, 2021
Industrial Partnerships	20	%	—	$	—	$	140,967	$	(6,335)	$	—

(1) Our ownership interest reflects legal ownership interest. Legal ownership may, at times, not equal our economic interest in the listed properties because of various provisions in certain entity agreements regarding capital contributions, distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, our actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with legal ownership interests.

(2) All seven assets held by our Industrial Partnerships were sold during the three months ended September 30, 2022. As the portion of the net proceeds applied to our investment basis that we expect to receive at closing was less than our $121.4 million carrying amount of investment in unconsolidated entities, we recognized an other than temporary impairment of $7.8 million during the six months ended June 30, 2022. We recorded an additional impairment of $0.7 million during the three months ended September 30, 2022. The other than temporary impairments are included in 'Equity in income and impairment of investment in unconsolidated entities' in the consolidated statements of income and comprehensive income for the periods presented.