Investments in Real Estate

3 Months Ended

Mar. 31, 2025

A. Acquisitions of Real Estate

Below is a summary of our acquisitions for the three months ended March 31, 2025 (unaudited):


	Number of Properties	Leasable Square Feet (in thousands)	Investment ($ in millions)		Weighted Average Lease Term (Years)	Initial Weighted Average Cash Yield (1)
Acquisitions
U.S. real estate	34	1,038	$	201.6	12.2	6.9	%
Europe real estate	16	2,689	824.7		3.9	7.0	%
Total real estate acquisitions	50	3,727	$	1,026.3	5.6	7.0	%
Real Estate Properties Under Development
U.S. real estate	55	1,994	$	70.2	16.8	7.2	%
Europe real estate	13	319	68.7		10.8	7.5	%
Total real estate properties under development	68	2,313	$	138.9	13.7	7.4	%
Total (2)	118	6,040	$	1,165.2	6.6	7.0	%

(1)The initial weighted average cash 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 base rent (defined as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables), 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 $0.8 million received as settlement credits as reimbursement of free rent periods for the three months ended March 31, 2025.

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 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)Our clients occupying the new properties are 90.3% retail and 9.7% industrial based on net operating income. Approximately 29% of the net operating income generated from acquisitions during the three months ended March 31, 2025 was from investment grade rated clients, their subsidiaries, or affiliated companies at the date of acquisition.

The aggregate purchase price, excluding properties under development as of March 31, 2025, has been allocated as follows (in millions):


	Acquisitions - USD		Acquisitions - Sterling		Acquisitions - Euro
Land	$	41.2	£	149.8	€	56.1
Buildings and improvements	164.7		179.7		153.4
Lease intangible assets (1)	39.8		54.3		35.0
Other assets (2)	5.8		63.4		—
Lease intangible liabilities (3)	(10.3)		(3.5)		(4.8)

Total	$	241.2	£	443.7	€	239.7

(1)The weighted average amortization period for acquired lease intangible assets is 7.2 years.

(2)USD-denominated other assets consist entirely of $5.8 million of financing receivables allocated to sales-leaseback transactions. Sterling-denominated other assets consist entirely of £63.4 million of right-of-use assets accounted for as finance leases.

(3)The weighted average amortization period for acquired lease intangible liabilities is 14.1 years.

The properties acquired during the three months ended March 31, 2025 generated total revenue and net income of $6.6 million and $2.3 million, respectively.

B. Investments in Existing Properties

During the three months ended March 31, 2025, we capitalized costs of $30.7 million on existing properties in our portfolio, consisting of $29.8 million for non-recurring building improvements, $0.9 million for re-leasing costs, and less than $0.1 million for recurring capital expenditures. In comparison, during the three months ended March 31, 2024, we capitalized costs of $7.4 million on existing properties in our portfolio, consisting of $6.4 million for non-recurring building improvements, $0.9 million for re-leasing costs, and less than $0.1 million for recurring capital expenditures.

C. Properties with Existing Leases

The value of the in-place and above-market leases is recorded to 'Lease intangible assets, net' on our consolidated balance sheets, and the value of the below-market leases is recorded to 'Lease intangible liabilities, net' on our consolidated balance sheets.

The values of the in-place leases are amortized as depreciation and amortization expense. The amounts amortized to expense for all of our in-place leases, for the three months ended March 31, 2025 and 2024 were $213.2 million and $211.5 million, respectively.

The values of the above-market and below-market leases are amortized over the term of the respective leases, including any bargain renewal options, as an adjustment to rental revenue in our consolidated statements of income and comprehensive income. The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the three months ended March 31, 2025 and 2024 were $9.7 million and $9.1 million, respectively. If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense, as appropriate.

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 March 31, 2025 (in thousands):


	Net increase (decrease) to rental revenue		Increase to amortization expense
2025	$	(27,936)	$	605,511
2026	(39,553)		711,360
2027	(39,149)		603,914
2028	(30,388)		509,598
2029	(26,211)		439,120
Thereafter	337,843		1,910,474
Total	$	174,606	$	4,779,977

D. Gain on Sales of Real Estate

The following table summarizes our properties sold during the periods indicated below (dollars in millions):


	Three months ended March 31,
		2025		2024
Number of properties		55		46
Net sales proceeds		$	92.6	$	95.6
Gain on sales of real estate		$	22.5	$	16.6