QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip code) |
☑ | No | ☐ |
☑ | No | ☐ |
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |
Smaller Reporting Company | Emerging growth company |
Yes | No | ☑ |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Page | |
(in thousands, except per share data) | |||||||
June 30, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Real estate investments | |||||||
Property owned | $ | $ | |||||
Less accumulated depreciation | ( | ) | ( | ) | |||
Unimproved land | |||||||
Mortgage loans receivable | |||||||
Total real estate investments | |||||||
Cash and cash equivalents | |||||||
Restricted cash | |||||||
Other assets | |||||||
TOTAL ASSETS | $ | $ | |||||
LIABILITIES, MEZZANINE EQUITY, AND EQUITY | |||||||
LIABILITIES | |||||||
Accounts payable and accrued expenses | $ | $ | |||||
Revolving lines of credit | |||||||
Notes payable, net of unamortized loan costs of $845 and $942 respectively | |||||||
Mortgages payable, net of unamortized loan costs of $1,525 and $1,712, respectively | |||||||
TOTAL LIABILITIES | $ | $ | |||||
COMMITMENTS AND CONTINGENCIES (NOTE 10) | |||||||
SERIES D PREFERRED UNITS (Cumulative convertible preferred units, $100 par value, 166 units issued and outstanding at June 30, 2020 and December 31, 2019, aggregate liquidation preference of $16,560) | $ | $ | |||||
EQUITY | |||||||
Series C Preferred Shares of Beneficial Interest (Cumulative redeemable preferred shares, no par value, $25 per share liquidation preference, 3,883 shares issued and outstanding at June 30, 2020, aggregate liquidation preference of $97,085 and 4,118 shares issued and outstanding at December 31, 2019, aggregate liquidation preference of $102,971) | |||||||
Common Shares of Beneficial Interest (Unlimited authorization, no par value, 12,827 shares issued and outstanding at June 30, 2020 and 12,098 shares issued and outstanding at December 31, 2019) | |||||||
Accumulated distributions in excess of net income | ( | ) | ( | ) | |||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Total shareholders’ equity | $ | $ | |||||
Noncontrolling interests – Operating Partnership (1,022 units at June 30, 2020 and 1,058 units at December 31, 2019) | |||||||
Noncontrolling interests – consolidated real estate entities | |||||||
Total equity | $ | $ | |||||
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY | $ | $ |
(in thousands, except per share data) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
REVENUE | $ | $ | $ | $ | |||||||||||
EXPENSES | |||||||||||||||
Property operating expenses, excluding real estate taxes | |||||||||||||||
Real estate taxes | |||||||||||||||
Property management expense | |||||||||||||||
Casualty loss | |||||||||||||||
Depreciation and amortization | |||||||||||||||
General and administrative expenses | |||||||||||||||
TOTAL EXPENSES | $ | $ | $ | $ | |||||||||||
Operating income (loss) | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Loss on extinguishment of debt | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Interest and other income (loss) | ( | ) | |||||||||||||
Income (loss) before gain (loss) on sale of real estate and other investments, and gain (loss) on litigation settlement | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Gain (loss) on sale of real estate and other investments | ( | ) | ( | ) | |||||||||||
Gain (loss) on litigation settlement | |||||||||||||||
NET INCOME (LOSS) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
Dividends to preferred unitholders | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net (income) loss attributable to noncontrolling interests – Operating Partnership | ( | ) | |||||||||||||
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | ( | ) | |||||||||||||
Net income (loss) attributable to controlling interests | ( | ) | ( | ) | ( | ) | |||||||||
Dividends to preferred shareholders | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Discount on redemption of preferred shares | |||||||||||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
BASIC | |||||||||||||||
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
DILUTED | |||||||||||||||
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
(in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
Other comprehensive income: | |||||||||||||||
Unrealized gain (loss) from derivative instrument | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
(Gain) loss on derivative instrument reclassified into earnings | ( | ) | ( | ) | |||||||||||
Total comprehensive income (loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership | |||||||||||||||
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | ( | ) | |||||||||||||
Comprehensive income (loss) attributable to controlling interests | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
(in thousands, except per share data) | |||||||||||||||||||||||||
Six Months Ended June 30, 2019 | PREFERRED SHARES | NUMBER OF COMMON SHARES | COMMON SHARES | ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NONREDEEMABLE NONCONTROLLING INTERESTS | TOTAL EQUITY | ||||||||||||||||||
Balance December 31, 2018 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Change in fair value of derivatives | ( | ) | ( | ) | |||||||||||||||||||||
Distributions - common shares and units ($0.70 per share and unit) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Distributions – Series C preferred shares ($0.4140625 per Series C share) | ( | ) | ( | ) | |||||||||||||||||||||
Share-based compensation, net of forfeitures | |||||||||||||||||||||||||
Redemption of units for common shares | ( | ) | |||||||||||||||||||||||
Redemption of units for cash | ( | ) | ( | ) | |||||||||||||||||||||
Shares repurchased | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Acquisition of redeemable noncontrolling interests | |||||||||||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Balance June 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||
Six Months Ended June 30, 2020 | |||||||||||||||||||||||||
Balance December 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||
Net income (loss) attributable to controlling interests and noncontrolling interests | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Change in fair value of derivatives | ( | ) | ( | ) | |||||||||||||||||||||
Distributions - common shares and units ($0.70 per share and unit) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Distributions – Series C preferred shares ($0.4140625 per Series C share) | ( | ) | ( | ) | |||||||||||||||||||||
Share-based compensation, net of forfeitures | |||||||||||||||||||||||||
Sale of common shares, net | |||||||||||||||||||||||||
Redemption of units for common shares | ( | ) | |||||||||||||||||||||||
Redemption of units for cash | ( | ) | ( | ) | |||||||||||||||||||||
Shares repurchased | ( | ) | — | — | ( | ) | |||||||||||||||||||
Acquisition of noncontrolling interests | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Other | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance June 30, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ |
(in thousands, except per share data) | |||||||||||||||||||||||||
Three Months Ended June 30, 2019 | PREFERRED SHARES | NUMBER OF COMMON SHARES | COMMON SHARES | ACCUMULATED DISTRIBUTIONS IN EXCESS OF NET INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NONREDEEMABLE NONCONTROLLING INTERESTS | TOTAL EQUITY | ||||||||||||||||||
Balance March 31, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||
Net income (loss) attributable to controlling interests and nonredeemable noncontrolling interests | ( | ) | |||||||||||||||||||||||
Change in fair value of derivatives | ( | ) | ( | ) | |||||||||||||||||||||
Distributions - common shares and units ($0.70 per share and unit) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Distributions – Series C preferred shares ($0.4140625 per Series C share) | ( | ) | ( | ) | |||||||||||||||||||||
Share-based compensation, net of forfeitures | |||||||||||||||||||||||||
Redemption of units for common shares | ( | ) | |||||||||||||||||||||||
Redemption of units for cash | ( | ) | ( | ) | |||||||||||||||||||||
Shares repurchased | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Balance June 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||
Three Months Ended June 30, 2020 | |||||||||||||||||||||||||
Balance March 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||
Net income (loss) attributable to controlling interests and noncontrolling interests | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Change in fair value of derivatives | ( | ) | ( | ) | |||||||||||||||||||||
Distributions - common shares and units ($0.70 per share and unit) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
Distributions – Series C preferred shares ($0.4140625 per Series C share) | ( | ) | ( | ) | |||||||||||||||||||||
Share-based compensation, net of forfeitures | |||||||||||||||||||||||||
Sale of common shares, net | |||||||||||||||||||||||||
Redemption of units for common shares | ( | ) | |||||||||||||||||||||||
Redemption of units for cash | ( | ) | ( | ) | |||||||||||||||||||||
Shares repurchased | ( | ) | ( | ) | |||||||||||||||||||||
Other | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance June 30, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ |
(in thousands) | |||||||
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income (loss) | $ | ( | ) | $ | ( | ) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization, including amortization of capitalized loan costs | |||||||
(Gain) loss on sale of real estate and other investments | ( | ) | |||||
Realized (gain) loss on marketable securities | |||||||
(Gain) loss on litigation settlement | ( | ) | |||||
Share-based compensation expense | |||||||
Other, net | |||||||
Changes in other assets and liabilities: | |||||||
Other assets | ( | ) | ( | ) | |||
Accounts payable and accrued expenses | ( | ) | ( | ) | |||
Net cash provided by (used by) operating activities | $ | $ | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Proceeds from sale of marketable securities | |||||||
Principal proceeds on mortgage loans receivable | |||||||
Increase in mortgages and notes receivable | ( | ) | ( | ) | |||
Proceeds from sale of real estate and other investments | |||||||
Payments for acquisitions of real estate assets | ( | ) | ( | ) | |||
Payments for improvements of real estate assets | ( | ) | ( | ) | |||
Other investing activities | |||||||
Net cash provided by (used by) investing activities | $ | ( | ) | $ | ( | ) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Principal payments on mortgages payable | ( | ) | ( | ) | |||
Proceeds from revolving lines of credit | |||||||
Principal payments on revolving lines of credit | ( | ) | ( | ) | |||
Payments for acquisition of noncontrolling interests – consolidated real estate entities | ( | ) | ( | ) | |||
Proceeds from issuance of common shares | |||||||
Repurchase of common shares | ( | ) | |||||
Repurchase of Series C preferred shares | ( | ) | |||||
Repurchase of partnership units | ( | ) | ( | ) | |||
Distributions paid to common shareholders | ( | ) | ( | ) | |||
Distributions paid to preferred shareholders | ( | ) | ( | ) | |||
Distributions paid to preferred unitholders | ( | ) | ( | ) | |||
Distributions paid to noncontrolling interests – Unitholders of the Operating Partnership | ( | ) | ( | ) | |||
Other financing activities | ( | ) | ( | ) | |||
Net cash provided by (used by) financing activities | $ | $ | |||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | |||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | |||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | $ |
SUPPLEMENTARY SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
Accrued capital expenditures | $ | ( | ) | $ | |||
Distributions declared but not paid to common shareholders | |||||||
Distributions declared but not paid to preferred shareholders | |||||||
Distributions declared but not paid to preferred unitholders | |||||||
Gain on litigation settlement | |||||||
Real estate assets acquired through exchange of note receivable | |||||||
Note receivable exchanged through real estate acquisition | ( | ) | |||||
Property acquired through issuance of Series D preferred units | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Cash paid for interest | $ | $ |
Standard | Description | Date of Adoption | Effect on the Financial Statements or Other Significant Matters |
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments; ASU 2018-19, Codification Improvements to Topic 326; ASU 2019-05, Financial Instruments - Credit Losses - Targeted Transition Relief | These ASUs require entities to estimate a lifetime expected credit loss for most financial assets, such as loans and other financial instruments, and to present the net amount expected to be collected. In 2018, another ASU was issued to amend ASU 2016-13, which clarifies that it does not apply to operating lease receivables. In 2019, an additional ASU was issued to provide transition relief in which an entity is allowed to elect the fair value option on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. | These ASUs are effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. | We elected the fair value option for all of our mortgages and notes receivable at January 1, 2020, as allowed by ASU 2019-05. As a result, we do not have any receivables or other financial instruments to which we are applying this standard. |
ASU 2018-13, Fair Value Measurements (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurements | This ASU eliminates certain disclosure requirements affecting all levels of measurement, and modifies and adds new disclosure requirements for Level 3 measurements. | This ASU is effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. | The new standard did not have a material impact on our condensed consolidated financial statements but did require additional disclosures. |
ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting | This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. | This ASU is optional and may be elected over time. | We are currently evaluating the practical expedients and the impact they may have on our condensed consolidated financial statements. |
(in thousands) | |||||||||||
Balance sheet description | June 30, 2020 | December 31, 2019 | June 30, 2019 | ||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ | $ |
(in thousands) | ||||
2020 (remainder) | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total scheduled lease income - operating leases | $ |
• | Other property revenues: We recognize revenue for rental related income not included as a component of a lease, such as application fees, as earned. |
• | Gains or losses on sales of real estate: A gain or loss is recognized when the criteria for derecognition of an asset are met, including when (1) a contract exists and (2) the buyer obtained control of the nonfinancial asset that was sold. |
(in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Revenue Stream | Applicable Standard | 2020 | 2019 | 2020 | 2019 | ||||||||||
Fixed lease income - operating leases | Leases | $ | $ | $ | $ | ||||||||||
Variable lease income - operating leases | Leases | ||||||||||||||
Other property revenue | Revenue from contracts with customers | ||||||||||||||
Total revenue | $ | $ | $ | $ |
(in thousands, except per share data) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
NUMERATOR | |||||||||||||||
Net income (loss) attributable to controlling interests | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
Dividends to preferred shareholders | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Redemption of preferred shares | |||||||||||||||
Numerator for basic earnings (loss) per share – net income available to common shareholders | ( | ) | ( | ) | ( | ) | |||||||||
Noncontrolling interests – Operating Partnership | ( | ) | ( | ) | ( | ) | |||||||||
Dividends to preferred unitholders | |||||||||||||||
Numerator for diluted earnings (loss) per share | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
DENOMINATOR | |||||||||||||||
Denominator for basic earnings per share weighted average shares | |||||||||||||||
Effect of redeemable operating partnership units | |||||||||||||||
Denominator for diluted earnings per share | |||||||||||||||
NET EARNINGS (LOSS) PER COMMON SHARE – BASIC | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||
NET EARNINGS (LOSS) PER COMMON SHARE – DILUTED | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
(in thousands, except per share amounts) | ||||||||||
Three Months Ended June 30, | Number of Common Shares | Total Consideration(1) | Average Price Per Share(1) | |||||||
2020 | $ | $ | ||||||||
Six Months Ended June 30, | ||||||||||
2020 | $ | $ |
(1) | Total consideration is net of commissions and issuance costs. |
(in thousands, except per Unit amounts) | ||||||||||
Three Months Ended June 30, | Number of Units | Aggregate Cost(1) | Average Price Per Unit | |||||||
2020 | $ | $ | ||||||||
2019 | $ | $ | ||||||||
Six Months Ended June 30, | ||||||||||
2020 | $ | $ | ||||||||
2019 | $ | $ |
(1) | The redemption price is determined using the volume weighted average price for the ten trading days prior to the date a unitholder provides notification of their intent to redeem units. |
(in thousands) | ||||||
Three Months Ended June 30, | Number of Units | Total Book Value | ||||
2020 | $ | |||||
2019 | $ | ( | ) | |||
Six Months Ended June 30, | ||||||
2020 | $ | |||||
2019 | $ | ( | ) |
(in thousands, except per share amounts) | |||||||||||||
Three Months Ended June 30, | Number of Common Shares | Number of Preferred Shares | Aggregate Cost(1) | Average Price Per Share(1) | |||||||||
2020 | — | $ | $ | ||||||||||
2019 | — | $ | $ | ||||||||||
Six Months Ended June 30, | |||||||||||||
2020 | — | $ | $ | ||||||||||
2019 | — | $ | $ |
(1) | Amount includes commissions. |
(in thousands) | |||||||
June 30, 2020 | December 31, 2019 | Weighted Average Maturity in Years at June 30, 2020 | |||||
Lines of credit | $ | $ | |||||
Term loans (1) | |||||||
Unsecured senior notes (1) | |||||||
Unsecured debt | |||||||
Mortgages payable - fixed | |||||||
Total debt | $ | $ | |||||
Weighted average interest rate on lines of credit (rate with swap) | % | % | |||||
Weighted average interest rate on term loans (rate with swap) | % | % | |||||
Weighted average interest rate on unsecured senior notes | % | % | |||||
Weighted average interest rate on mortgages payable | % | % |
(1) |
(in thousands) | |||
2020 (remainder) | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total payments | $ |
(in thousands) | |||||||||
June 30, 2020 | December 31, 2019 | ||||||||
Balance Sheet Location | Fair Value | Fair Value | |||||||
Total derivative instruments designated as hedging instruments - interest rate swaps | Accounts Payable and Accrued Expenses | $ | $ |
(in thousands) | |||||||||||||||||
Gain (Loss) Recognized in OCI | Location of Gain (Loss) Reclassified from Accumulated OCI into Income | Gain (Loss) Reclassified from Accumulated OCI into Income | |||||||||||||||
Three months ended June 30, | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | ( | ) | $ | ( | ) | Interest expense | $ | $ | ( | ) | ||||||
Six months ended June 30, | |||||||||||||||||
Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | ( | ) | $ | ( | ) | Interest expense | $ | $ | ( | ) |
(in thousands) | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
June 30, 2020 | |||||||||||||||
Assets | |||||||||||||||
Mortgages and notes receivable | $ | $ | |||||||||||||
Liabilities | |||||||||||||||
Derivative instruments - interest rate swaps | $ | $ | |||||||||||||
December 31, 2019 | |||||||||||||||
Liabilities | |||||||||||||||
Derivative instruments - interest rate swaps | $ | $ | $ | $ |
(in thousands) | |||||||||||||||
Fair Value Measurement at June 30, 2020 | Other Gains (Losses) | Interest Income | Total Changes in Fair Value Included in Current-Period Earnings | ||||||||||||
Mortgage loans and notes receivable | $ | $ | $ | $ |
(in thousands) | |||||||||||||||
June 30, 2020 | December 31, 2019 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
FINANCIAL ASSETS | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||
Restricted cash | $ | $ | $ | $ | |||||||||||
Mortgage and note receivable(2) | $ | $ | |||||||||||||
FINANCIAL LIABILITIES | |||||||||||||||
Revolving lines of credit(1) | $ | $ | $ | $ | |||||||||||
Notes payable(1) | $ | $ | $ | $ | |||||||||||
Mortgages payable | $ | $ | $ | $ |
(1) | Excluding the effect of interest rate swap agreements. |
(2) | As of January 1, 2020, we elected the fair value option, as allowed under ASU 2019-05. Fair value for these instruments is discussed within the Fair Value Measurements on a Recurring Basis section above. |
Date Acquired | (in thousands) | ||||||||||||||||||||||||||||
Total Acquisition Cost | Form of Consideration | Investment Allocation | |||||||||||||||||||||||||||
Acquisitions | Cash | Other(1) | Land | Building | Intangible Assets | Other(2) | |||||||||||||||||||||||
182 homes - Ironwood Apartments - New Hope, MN | March 5, 2020 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Total Acquisitions | $ | $ | $ | $ | $ | $ | $ |
(1) | Payoff of note receivable and accrued interest by seller at closing. |
(2) | Consists of TIF note acquired. Refer to Note 2 for further discussion. |
Date Acquired | (in thousands) | ||||||||||||||||||||||||
Total Acquisition Cost | Form of Consideration | Investment Allocation | |||||||||||||||||||||||
Acquisitions | Cash | Units(1) | Land | Building | Intangible Assets | ||||||||||||||||||||
Multifamily | |||||||||||||||||||||||||
272 homes - SouthFork Townhomes - Lakeville, MN | February 26, 2019 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | |||||||||||||||||||||||||
Minot 3100 10th St SW - Minot, ND(2) | May 23, 2019 | $ | $ | $ | $ | ||||||||||||||||||||
Total Acquisitions | $ | $ | $ | $ | $ | $ |
(1) | Value of Series D preferred units at the acquisition date. |
(in thousands) | |||||||||||||
Dispositions | Date Disposed | Sale Price | Book Value and Sales Cost | Gain/(Loss) | |||||||||
Unimproved Land | |||||||||||||
Rapid City Land - Rapid City, SD | June 29, 2020 | $ | $ | $ | ( | ) | |||||||
Total Dispositions | $ | $ | $ | ( | ) |
(in thousands) | |||||||||||||
Dispositions | Date Disposed | Sale Price | Book Value and Sale Cost | Gain/(Loss) | |||||||||
Other | |||||||||||||
Minot 1400 31st Ave SW - Minot, ND | May 23, 2019 | $ | $ | $ | |||||||||
Unimproved Land | |||||||||||||
Creekside Crossing - Bismarck, ND | March 1, 2019 | $ | $ | $ | ( | ) | |||||||
Minot 1525 24th Ave SW - Minot, ND | April 3, 2019 | ||||||||||||
$ | $ | $ | ( | ) | |||||||||
Total Dispositions | $ | $ | $ |
(in thousands) | |||||||||||
Three Months Ended June 30, 2020 | Multifamily | All Other | Total | ||||||||
Revenue | $ | $ | $ | ||||||||
Property operating expenses, including real estate taxes | |||||||||||
Net operating income | $ | $ | $ | ||||||||
Property management | ( | ) | |||||||||
Casualty gain (loss) | ( | ) | |||||||||
Depreciation and amortization | ( | ) | |||||||||
General and administrative expenses | ( | ) | |||||||||
Interest expense | ( | ) | |||||||||
Interest and other income | |||||||||||
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement | ( | ) | |||||||||
Gain (loss) on sale of real estate and other investments | ( | ) | |||||||||
Net income (loss) | $ | ( | ) |
(in thousands) | |||||||||||
Three Months Ended June 30, 2019 | Multifamily | All Other | Total | ||||||||
Revenue | $ | $ | $ | ||||||||
Property operating expenses, including real estate taxes | |||||||||||
Net operating income | $ | $ | $ | ||||||||
Property management | ( | ) | |||||||||
Casualty gain (loss) | ( | ) | |||||||||
Depreciation and amortization | ( | ) | |||||||||
General and administrative expenses | ( | ) | |||||||||
Interest expense | ( | ) | |||||||||
Loss on debt extinguishment | ( | ) | |||||||||
Interest and other income | |||||||||||
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement | ( | ) | |||||||||
Gain (loss) on sale of real estate and other investments | |||||||||||
Gain (loss) on litigation settlement | |||||||||||
Net income (loss) | $ |
(in thousands) | |||||||||||
Six Months Ended June 30, 2020 | Multifamily | All Other | Total | ||||||||
Revenue | $ | $ | $ | ||||||||
Property operating expenses, including real estate taxes | |||||||||||
Net operating income | $ | $ | $ | ||||||||
Property management expenses | ( | ) | |||||||||
Casualty gain (loss) | ( | ) | |||||||||
Depreciation and amortization | ( | ) | |||||||||
General and administrative expenses | ( | ) | |||||||||
Interest expense | ( | ) | |||||||||
Loss on debt extinguishment | ( | ) | |||||||||
Interest and other income | ( | ) | |||||||||
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement | ( | ) | |||||||||
Gain (loss) on sale of real estate and other investments | ( | ) | |||||||||
Net income (loss) | $ | ( | ) |
(in thousands) | |||||||||||
Six Months Ended June 30, 2019 | Multifamily | All Other | Total | ||||||||
Revenue | $ | $ | $ | ||||||||
Property operating expenses, including real estate taxes | |||||||||||
Net operating income | $ | $ | $ | ||||||||
Property management expenses | ( | ) | |||||||||
Casualty gain (loss) | ( | ) | |||||||||
Depreciation and amortization | ( | ) | |||||||||
General and administrative expenses | ( | ) | |||||||||
Interest expense | ( | ) | |||||||||
Loss on debt extinguishment | ( | ) | |||||||||
Interest and other income | |||||||||||
Income (loss) before gain (loss) on sale of real estate and other investments and gain (loss) on litigation settlement | ( | ) | |||||||||
Gain (loss) on sale of real estate and other investments | |||||||||||
Gain (loss) on litigation settlement | |||||||||||
Net income (loss) | $ | ( | ) |
(in thousands) | |||||||||||
As of June 30, 2020 | Multifamily | All Other | Total | ||||||||
Segment assets | |||||||||||
Property owned | $ | $ | $ | ||||||||
Less accumulated depreciation | ( | ) | ( | ) | ( | ) | |||||
Total property owned | $ | $ | $ | ||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Other assets | |||||||||||
Mortgage loans receivable | |||||||||||
Total Assets | $ |
(in thousands) | |||||||||||
As of December 31, 2019 | Multifamily | All Other | Total | ||||||||
Segment assets | |||||||||||
Property owned | $ | $ | $ | ||||||||
Less accumulated depreciation | ( | ) | ( | ) | ( | ) | |||||
Total property owned | $ | $ | $ | ||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Other assets | |||||||||||
Unimproved land | |||||||||||
Mortgage loans receivable | |||||||||||
Total Assets | $ |
2020 | |||
Exercise price | $ | ||
Risk-free rate | % | ||
Expected term | |||
Expected volatility | % | ||
Dividend yield | % |
• | the COVID-19 pandemic and its ongoing effects on our employees, residents, and commercial tenants, third party vendors and suppliers, and apartment communities, as well as our cash flow, business, financial condition, and results of operation; |
• | deteriorating economic conditions and rising unemployment rates in the markets where we own apartment communities or in which we may invest in the future; |
• | government actions or regulations arising out of the COVID-19 pandemic that limit economic and consumer activity or affect the operation of our properties; |
• | rental conditions in our markets, including occupancy levels and rental rates, our potential inability to renew residents or obtain new residents upon expiration of existing leases, changes in tax and housing laws, or other factors, including the impact of the COVID-19-related governmental rules and regulations relating to rental rates, evictions, and other rental conditions; |
• | changes in operating costs, including real estate taxes, utilities, insurance costs, and expenses related to complying with COVID-19 restrictions or otherwise responding to the COVID-19 pandemic; |
• | adverse changes in our markets, including future demand for apartment homes in our markets, barriers of entry into new markets, limitations on our ability to increase rental rates, our inability to identify and consummate attractive acquisitions and dispositions on favorable terms, our inability to reinvest sales proceeds successfully, and our inability to accommodate any significant decline in the market value of real estate serving as collateral for our mortgage obligations; |
• | reliance on a single asset class (multifamily) and certain geographic areas of the U.S.; |
• | inability to expand our operations into new or existing markets successfully; |
• | failure of new acquisitions to achieve anticipated results or be efficiently integrated; |
• | inability to complete lease-up of our projects on schedule and on budget; |
• | inability to sell our non-core properties on terms that are acceptable; |
• | failure to reinvest proceeds from sales of properties into tax-deferred exchanges, which could necessitate special dividend and tax protection payments; |
• | inability to fund capital expenditures out of cash flow; |
• | inability to pay, or need to reduce, dividends on our common shares; |
• | inability to raise additional equity capital; |
• | financing risks, including our potential inability to meet existing covenants in our existing credit facilities or to obtain new debt or equity financing on favorable terms, or at all; |
• | level and volatility of interest or capitalization rates or capital market conditions; |
• | loss contingencies and the availability and cost of casualty insurance for losses; |
• | inability to continue to satisfy complex rules in order to maintain our status as a REIT for federal income tax purposes, inability of the Operating Partnership to satisfy the rules to maintain its status as a partnership for federal income tax purposes, and the risk of changes in laws affecting REITs; |
• | inability to attract and retain qualified personnel; |
• | cyber liability or potential liability for breaches of our privacy or information security systems; |
• | inability to address catastrophic weather, natural events, and climate change; |
• | inability to comply with laws and regulations applicable to our business and any related investigations or litigation; and |
• | other risks identified in this Report, in other SEC reports, or in other documents that we publicly disseminate. |
• | cause our residents or commercial tenants to defer or stop rental payments, and abandon or fail to renew leases, which would reduce our primary source of net operating income and cash flows; |
• | cause the capital markets generally to become restricted or unavailable, thereby limiting our access to any needed debt or equity capital financing; |
• | impact the business of, or cause the loss of, certain critical third-party suppliers or other service providers; |
• | restrict our ability to continue to pay dividends on a quarterly basis at the current rate, or at all, which could hinder our ability to meet the REIT distribution requirements and continue to qualify as a REIT; |
• | impair the value of our tangible or intangible assets; |
• | require us to record loss contingencies and incur additional expenses related to our COVID-19 response; or |
• | cause the U.S. economy to suffer an extended economic slowdown, which could lead to a prolonged recession or even economic depression, which in turn would affect the demand for our apartment communities and could have an adverse impact on our business and operating results. |
• | With respect to capital projects and investments, we continue to monitor changing government rules and regulations related to COVID-19 and continue to abide by the guidelines set forth by the Center for Disease Control and have initiated a review of capital spend to identify projects that can be delayed; |
• | We have eliminated the majority of planned travel expense for our team members through the end of 2020; and |
• | We have moved the meetings of our Board of Trustees to virtual meetings, thereby limiting the expense associated with in-person meetings. |
(in thousands, except percentages) | ||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||
Operating income (loss) | $ | 2,524 | $ | 3,895 | $ | (1,371 | ) | (35.2 | )% | $ | 4,528 | $ | 5,355 | $ | (827 | ) | (15.4 | )% | ||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||
Property management expenses | 1,345 | 1,445 | (100 | ) | (6.9 | ) | 2,899 | 2,999 | (100 | ) | (3.3 | )% | ||||||||||||||||||
Casualty loss | 913 | 92 | 821 | 892.4 | % | 1,240 | 733 | 507 | 69.2 | % | ||||||||||||||||||||
Depreciation and amortization | 18,156 | 18,437 | (281 | ) | (1.5 | )% | 36,316 | 36,548 | (232 | ) | (0.6 | )% | ||||||||||||||||||
General and administrative expenses | 3,202 | 3,549 | (347 | ) | (9.8 | )% | 6,630 | 7,355 | (725 | ) | (9.9 | )% | ||||||||||||||||||
Net operating income | $ | 26,140 | $ | 27,418 | $ | (1,278 | ) | (4.7 | )% | $ | 51,613 | $ | 52,990 | $ | (1,377 | ) | (2.6 | )% |
(in thousands, except percentages) | ||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2020 vs. 2019 | 2020 vs. 2019 | |||||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||
Same-store | $ | 39,335 | $ | 38,794 | $ | 541 | 1.4 | % | $ | 79,155 | $ | 77,122 | $ | 2,033 | 2.6 | % | ||||||||||||||
Non-same-store | 4,157 | 1,073 | 3,084 | 287.4 | % | 7,668 | 1,484 | 6,184 | 416.7 | % | ||||||||||||||||||||
Other properties and dispositions | 418 | 7,067 | (6,649 | ) | (94.1 | )% | 1,493 | 13,936 | (12,443 | ) | (89.3 | )% | ||||||||||||||||||
Total | 43,910 | 46,934 | (3,024 | ) | (6.4 | )% | 88,316 | 92,542 | (4,226 | ) | (4.6 | )% | ||||||||||||||||||
Property operating expenses, including real estate taxes | ||||||||||||||||||||||||||||||
Same-store | 16,006 | 15,726 | 280 | 1.8 | % | 33,264 | 32,327 | 937 | 2.9 | % | ||||||||||||||||||||
Non-same-store | 1,515 | 477 | 1,038 | 217.6 | % | 2,835 | 647 | 2,188 | 338.2 | % | ||||||||||||||||||||
Other properties and dispositions | 249 | 3,313 | (3,064 | ) | (92.5 | )% | 604 | 6,578 | (5,974 | ) | (90.8 | )% | ||||||||||||||||||
Total | 17,770 | 19,516 | (1,746 | ) | (8.9 | )% | 36,703 | 39,552 | (2,849 | ) | (7.2 | )% | ||||||||||||||||||
Net operating income | ||||||||||||||||||||||||||||||
Same-store | 23,329 | 23,068 | 261 | 1.1 | % | 45,891 | 44,795 | 1,096 | 2.4 | % | ||||||||||||||||||||
Non-same-store | 2,642 | 596 | 2,046 | 343.3 | % | 4,833 | 837 | 3,996 | 477.4 | % | ||||||||||||||||||||
Other properties and dispositions | 169 | 3,754 | (3,585 | ) | (95.5 | )% | 889 | 7,358 | (6,469 | ) | (87.9 | )% | ||||||||||||||||||
Total | $ | 26,140 | $ | 27,418 | $ | (1,278 | ) | (4.7 | )% | $ | 51,613 | $ | 52,990 | $ | (1,377 | ) | (2.6 | )% | ||||||||||||
Property management expenses | (1,345 | ) | (1,445 | ) | (100 | ) | (6.9 | )% | (2,899 | ) | (2,999 | ) | (100 | ) | (3.3 | ) | ||||||||||||||
Casualty gain (loss) | (913 | ) | (92 | ) | 821 | 892.4 | % | (1,240 | ) | (733 | ) | 507 | 69.2 | % | ||||||||||||||||
Depreciation and amortization | (18,156 | ) | (18,437 | ) | (281 | ) | (1.5 | )% | (36,316 | ) | (36,548 | ) | (232 | ) | (0.6 | )% | ||||||||||||||
General and administrative expenses | (3,202 | ) | (3,549 | ) | (347 | ) | (9.8 | )% | (6,630 | ) | (7,355 | ) | (725 | ) | (9.9 | )% | ||||||||||||||
Interest expense | (6,940 | ) | (7,590 | ) | (650 | ) | (8.6 | )% | (13,851 | ) | (15,486 | ) | (1,635 | ) | (10.6 | )% | ||||||||||||||
Loss on extinguishment of debt | (17 | ) | (407 | ) | (390 | ) | (95.8 | )% | (17 | ) | (409 | ) | (392 | ) | (95.8 | )% | ||||||||||||||
Interest and other income (loss) | 538 | 468 | 70 | 15.0 | % | (2,239 | ) | 892 | (3,131 | ) | (351.0 | )% | ||||||||||||||||||
Income (loss) before gain (loss) on sale of real estate and other investments, and gain (loss) on litigation settlement | (3,895 | ) | (3,634 | ) | (261 | ) | 7.2 | % | (11,579 | ) | (9,648 | ) | (1,931 | ) | 20.0 | % | ||||||||||||||
Gain (loss) on sale of real estate and other investments | (190 | ) | 615 | (805 | ) | (130.9 | )% | (190 | ) | 669 | (859 | ) | (128.4 | )% | ||||||||||||||||
Gain (loss) on litigation settlement | — | 6,286 | (6,286 | ) | 100.0 | % | — | 6,286 | (6,286 | ) | 100.0 | % | ||||||||||||||||||
NET INCOME (LOSS) | $ | (4,085 | ) | $ | 3,267 | $ | (7,352 | ) | (225.0 | )% | $ | (11,769 | ) | $ | (2,693 | ) | $ | (9,076 | ) | 337.0 | % | |||||||||
Dividends to preferred unitholders | (160 | ) | (160 | ) | — | — | (320 | ) | (217 | ) | (103 | ) | 47.5 | % | ||||||||||||||||
Net (income) loss attributable to noncontrolling interests – Operating Partnership | 447 | (148 | ) | 595 | (402.0 | )% | 1,139 | 595 | 544 | 91.4 | % | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | (5 | ) | 154 | (159 | ) | (103.2 | )% | 140 | 730 | (590 | ) | (80.8 | )% | |||||||||||||||||
Net income (loss) attributable to controlling interests | (3,803 | ) | 3,113 | (6,916 | ) | (222.2 | )% | (10,810 | ) | (1,585 | ) | (9,225 | ) | 582.0 | % | |||||||||||||||
Dividends to preferred shareholders | (1,609 | ) | (1,706 | ) | 97 | (5.7 | )% | (3,314 | ) | (3,411 | ) | 97 | (2.8 | )% | ||||||||||||||||
Redemption of Preferred Shares | 25 | — | 25 | — | 298 | — | 298 | — | ||||||||||||||||||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (5,387 | ) | $ | 1,407 | $ | (6,794 | ) | (482.9 | )% | $ | (13,826 | ) | $ | (4,996 | ) | $ | (8,830 | ) | 176.7 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
Weighted Average Occupancy(1) | 2020 | 2019 | 2020 | 2019 | |||||||
Same-store | 94.6 | % | 94.3 | % | 95.0 | % | 94.9 | % | |||
Non-same-store | 93.9 | % | 94.8 | % | 93.6 | % | 94.8 | % | |||
Total | 94.5 | % | 94.4 | % | 94.8 | % | 94.9 | % |
(1) | Weighted average occupancy is defined as the percentage resulting from dividing actual rental revenue by scheduled rental revenue. Scheduled rental revenue represents the value of all apartment homes, with occupied homes valued at contractual rental rates pursuant to leases and vacant homes valued at estimated market rents. When calculating actual rents for occupied homes and market rents for vacant homes, delinquencies, and concessions are not taken into account. Market rates are determined using the currently offered effective rates on new leases at the community and are used as the starting point in determination of the market rates of vacant apartment homes. We believe that weighted average occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Weighted average occupancy may not completely reflect short-term trends in physical occupancy, and our calculation of weighted average occupancy may not be comparable to that disclosed by other REITs. |
Number of Apartment Homes | June 30, 2020 | June 30, 2019 | |||
Same-store | 11,257 | 12,848 | |||
Non-same-store | 878 | 1,127 | |||
Total | 12,135 | 13,975 |
• | depreciation and amortization related to real estate; |
• | gains and losses from the sale of certain real estate assets; and |
• | impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. |
(in thousands, except per share and unit amounts) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net income (loss) available to common shareholders | $ | (5,387 | ) | $ | 1,407 | $ | (13,826 | ) | $ | (4,996 | ) | |||||
Adjustments: | ||||||||||||||||
Noncontrolling interests – Operating Partnership | (447 | ) | 148 | (1,139 | ) | (595 | ) | |||||||||
Depreciation and amortization | 18,156 | 18,437 | 36,316 | 36,548 | ||||||||||||
Less depreciation – non real estate | (88 | ) | (79 | ) | (181 | ) | (164 | ) | ||||||||
Less depreciation – partially owned entities | (33 | ) | (474 | ) | (315 | ) | (1,152 | ) | ||||||||
(Gain) loss on sale of real estate | 190 | (615 | ) | 190 | (669 | ) | ||||||||||
Funds from operations applicable to common shares and Units | $ | 12,391 | $ | 18,824 | $ | 21,045 | $ | 28,972 | ||||||||
Funds from operations applicable to common shares and Units | $ | 12,391 | $ | 18,824 | $ | 21,045 | $ | 28,972 | ||||||||
Dividends to preferred unitholders | 160 | 160 | 320 | 217 | ||||||||||||
Funds from operations applicable to common shares and Units - diluted | $ | 12,551 | $ | 18,984 | $ | 21,365 | $ | 29,189 | ||||||||
Per Share Data | ||||||||||||||||
Earnings (loss) per common share - diluted | $ | (0.44 | ) | $ | 0.11 | $ | (1.13 | ) | $ | (0.43 | ) | |||||
FFO per share and Unit - diluted | $ | 0.93 | $ | 1.45 | $ | 1.58 | $ | 2.22 | ||||||||
Weighted average shares and Units - diluted | 13,558 | 13,197 | 13,482 | 13,220 |
• | At the end of the second quarter, we had $239.7 million of total liquidity on our balance sheet, including $187.0 million available under our unsecured line of credit and $52.7 million of cash and cash equivalents. |
• | We have approximately $9.4 million of debt maturities remaining in 2020 and approximately $35.6 million of debt maturities in 2021. |
• | We have approximately $34.0 million remaining to fund, primarily over the next 12 months, under construction and mezzanine loans we originated for the development of a multifamily community in Minneapolis, Minnesota. |
• | we are unable to make certain representations and warranties, including a certification that, since April 30, 2018, there has been no adverse change in our business, financial condition, operations, performance or properties, taken as a whole, which would reasonably be expected to have a material adverse effect; |
• | changes in our consolidated property NOI or capitalization rates applicable to the properties in our borrowing base reduce or eliminate availability under our credit facility; or |
• | changes in the nature and composition (including occupancy rate) of the properties in our borrowing base cause these properties to become ineligible to be part of our borrowing base, and if we are not able to replace such properties with other qualifying properties, such ineligibility could reduce or eliminate the availability under our credit facility. |
• | credit market deterioration or overall economic conditions affect the ability of one or more of our lenders to meet their funding commitments under our revolving credit facility. If a lender fails to fund its commitment under the revolving credit facility, that portion of the credit facility will be unavailable if the lender’s commitment is not replaced by a new commitment from an alternate lender; |
• | distressed market conditions cause our lenders to transfer their commitments to other institutions, which could result in committed funds not being available, particularly if consolidation of the commitments under our credit facility or among its lenders were to occur; or |
• | we are unable to obtain additional letters of credit due to a default by any lender in meeting its funding obligations. |
• | Receiving $48.3 million in net proceeds from the issuance of approximately 674,000 common shares under our 2019 ATM Program; |
• | Repayment of $10.0 million of note receivables; |
• | Selling $3.9 million of marketable securities; and |
• | Selling a parcel of unimproved land for $1.3 million. |
• | Acquiring Ironwood Apartments, a 182-home apartment community located in New Hope, Minnesota, an inner-ring suburb of Minneapolis, for an aggregate purchase price of $46.3 million, of which $28.6 million was paid in cash and $17.7 million from payoff of a note receivable and accrued interest; |
• | Acquiring the noncontrolling interests in 71 France for $12.2 million; |
• | Funding of mezzanine/construction loans of $4.8 million; |
• | Repaying $6.1 million of mortgage principal; |
• | Repurchasing 235,075 Series C preferred shares for an aggregate total cost of approximately $5.6 million; and |
• | Funding capital improvements for apartment communities of approximately $12.4 million. |
• | "Our financial performance is subject to risks associated with the real estate industry and ownership of apartment communities"; |
• | "Our property acquisition activities may not produce the cash flows expected and could subject us to various risks that could adversely affect our operating results"; |
• | "We may be unable to acquire or develop properties and expand our operations into new or existing markets successfully"; |
• | "We are dependent on a concentration of our investments in a single asset class, making our results of operations more vulnerable to a downturn or slowdown in the sector or other economic factors"; |
• | "Our operations are concentrated in certain regions of the United States, and we are subject to general economic conditions in the regions in which we operate"; |
• | "Because real estate investments are relatively illiquid and various other factors limit our ability to dispose of assets, we may not be able to sell properties when appropriate"; |
• | "Inability to manage growth effectively may adversely affect our operating results"; |
• | "Future cash flows may not be sufficient to ensure recoverability of the carrying value of our real estate assets"; |
• | "The restrictive terms of indebtedness may cause acceleration of debt payments and constrain our ability to conduct certain transactions"; |
• | "Our stock price may fluctuate significantly"; and |
• | "Payment of distributions on our common shares is not guaranteed," |
• | cause our residents or commercial tenants to defer or stop rental payments, and abandon or fail to renew leases, which would reduce our primary source of net operating income and cash flows; |
• | cause us to increase our borrowing and our leverage and/or seek other sources of financing, which may not be available on favorable terms; |
• | cause us to fail to satisfy certain of the covenants under our line of credit or other borrowing facilities, which could limit our access to such financings or even lead to an event of default; |
• | cause the capital markets generally to become restricted or unavailable, thereby limiting our access to any needed debt or equity capital financing; |
• | impact the business of, or cause the loss of, certain critical third-party suppliers or other service providers; |
• | restrict our ability to continue to pay dividends on a quarterly basis at the current rate, or at all; |
• | impair the value of our tangible or intangible assets; |
• | require us to record loss contingencies and incur additional expenses related to our COVID-19 response; or |
• | cause the U.S. economy to suffer an extended economic slowdown, which could lead to a prolonged recession or even economic depression, which in turn would affect the demand for our apartment communities and could have an adverse impact on our business and operating results. |
• | our cash flow will be insufficient to meet required payments of principal and interest, particularly if net operating income is reduced significantly due to the effects of the COVID-19 pandemic; |
• | we will not be able to renew, refinance, or repay our indebtedness when due; and |
• | the terms of any renewal or refinancing are at terms less favorable than the terms of our current indebtedness. |
Maximum Dollar | |||||||||||
Total Number of Shares | Amount of Shares That | ||||||||||
Total Number of | Average Price | Purchased as Part of | May Yet Be Purchased | ||||||||
Shares and Units | Paid per | Publicly Announced | Under the Plans or | ||||||||
Period | Purchased (1) | Share and Unit(2) | Plans or Programs | Programs(3) | |||||||
April 1 - 30, 2020 | 54,777 | $ | 24.69 | 54,777 | $ | 45,510,888 | |||||
May 1 - 31, 2020 | 43,308 | 24.88 | 43,218 | 44,438,657 | |||||||
June 1 - 30, 2020 | 745 | 28.08 | 700 | 44,420,795 | |||||||
Total | 98,830 | $ | 24.80 | 98,695 |
(1) | Includes a total of 135 Units redeemed for cash pursuant to the exercise of exchange rights. Second quarter purchases included 98,695 Series C Preferred Shares. |
(2) | Amount includes commissions paid. |
(3) | Represents amounts outstanding under our $50 million share repurchase program, which was authorized by our Board of Trustees on December 5, 2019. |
* | Filed herewith |
** | Submitted electronically herewith. Attached as Exhibit 101 are the following materials from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Statements of Equity; (iv) the Condensed Consolidated Statements of Cash Flows; (v) notes to these condensed consolidated financial statements; and (vi) the Cover Page to our Quarterly Report on Form 10-Q. |
/s/ Mark O. Decker, Jr. | |
Mark O. Decker, Jr. | |
President and Chief Executive Officer | |
/s/ John A. Kirchmann | |
John A. Kirchmann | |
Executive Vice President and Chief Financial Officer | |
Date: August 3, 2020 |
1 | I have reviewed this quarterly report on Form 10-Q of Investors Real Estate Trust; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Mark O. Decker, Jr. | |
Mark O. Decker, Jr., President and Chief Executive Officer |
1 | I have reviewed this quarterly report on Form 10-Q of Investors Real Estate Trust; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ John A. Kirchmann | |
John A. Kirchmann, Executive Vice President and Chief Financial Officer | ||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Mark O. Decker, Jr. | |
Mark O. Decker, Jr. | |
President and Chief Executive Officer | |
August 3, 2020 |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ John A. Kirchmann | |
John A. Kirchmann | |
Executive Vice President and Chief Financial Officer | |
August 3, 2020 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (4,085) | $ 3,267 | $ (11,769) | $ (2,693) |
Other comprehensive income: | ||||
Unrealized gain (loss) from derivative instrument | (1,696) | (4,430) | (11,105) | (6,712) |
(Gain) loss on derivative instrument reclassified into earnings | 917 | (29) | 573 | (30) |
Total comprehensive income (loss) | (4,864) | (1,192) | (22,301) | (9,435) |
Net comprehensive (income) loss attributable to noncontrolling interests – Operating Partnership | 504 | 275 | 1,967 | 1,255 |
Net (income) loss attributable to noncontrolling interests – consolidated real estate entities | (5) | 154 | 140 | 730 |
Comprehensive income (loss) attributable to controlling interests | $ (4,365) | $ (763) | $ (20,194) | $ (7,450) |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Statement of Stockholders' Equity [Abstract] | ||||
Distributions - common share (in dollars per share) | $ 0.70 | $ 0.70 | $ 0.70 | $ 0.70 |
Distributions - preferred shares (in dollars per share) | $ 0.4140625 | $ 0.4140625 | $ 0.4140625 | $ 0.4140625 |
ORGANIZATION |
6 Months Ended |
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Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Investors Real Estate Trust, collectively with our consolidated subsidiaries (“IRET,” “we,” “us,” or “our”), is a real estate investment trust (“REIT”) focused on the ownership, management, acquisition, redevelopment, and development of apartment communities. As of June 30, 2020, we owned interests in 70 apartment communities consisting of 12,135 apartment homes. |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION We conduct a majority of our business activities through our consolidated operating partnership, IRET Properties, A North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying condensed consolidated financial statements include our accounts and the accounts of all our subsidiaries in which we maintain a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation. The condensed consolidated financial statements also reflect the Operating Partnership's ownership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into our operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses. SIGNIFICANT RISKS AND UNCERTAINTIES The COVID-19 pandemic is a source of significant risk and uncertainty that could have an adverse impact on our business. The COVID-19 pandemic has adversely impacted the global economy and financial markets, and multifamily residents and commercial tenants have experienced financial hardship or closures. We have received requests for rent relief in the form of rent deferrals or rent abatements due to these financial hardships and government-mandated closures. As of June 30, 2020, $68,000 remained outstanding under the rent deferral agreements offered to multifamily residents. During the three months ended June 30, 2020, we recognized a reduction in revenue of $402,000 due to rent abatements to commercial tenants. The extent to which the COVID-19 pandemic could have an adverse effect on our financial condition, results of operations, and cash flows is uncertain and will depend on future developments. The COVID-19 pandemic has not had a significant adverse effect on our financial condition, results of operations, and cash flows for the six months ended June 30, 2020; however, we continue to monitor the impact of the COVID-19 pandemic on all aspects of our business and cannot predict the impact it may have on our financial condition, results of operations, and cash flows in the future. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Our interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows for the interim periods, have been included. The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on February 19, 2020. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. RECENT ACCOUNTING PRONOUNCEMENTS The following table provides a brief description of recent accounting standards updates (“ASUs”).
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
As of June 30, 2020, restricted cash consisted primarily of escrows held by lenders for real estate taxes, insurance, and capital additions. LEASES Effective January 1, 2019, we adopted ASUs 2016-02, 2018-10, 2018-11, 2018-20, and 2019-01 related to leases using the modified retrospective approach. We elected to adopt the package of practical expedients permitted under the transition guidance, which permits us to not reassess prior conclusions about lease identification, classification, and initial direct costs under the new standard, and the practical expedient related to land easements, which allows us to not evaluate existing or expired land easements that were not previously accounted for under ASC 840. We made an accounting policy election to exclude leases in which we are a lessee with a term of 12 months or less from the balance sheet. As a lessor, we primarily lease multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.4% of our total revenues and includes gross market rent less adjustments for concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 1.6% of our total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time. Some of our apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms. Beginning in April 2020, we offered multifamily residents suffering from financial hardship related to the COVID-19 pandemic the option to apply for rent deferral. We also abated rent, common area maintenance, and tax expenses for commercial tenants that experienced government-mandated interruptions or closures of their businesses. We elected to account for these accommodations as though enforceable rights and obligations for the accommodation existed without evaluating if such a right or obligation existed under the lease agreement, as allowed by the FASB Q&A released on April 10, 2020 related to lease modification guidance under ASC 842. The accommodations were recognized as variable lease payments. As of June 30, 2020, $68,000 remained outstanding under the rent deferral agreements offered to multifamily residents. During the three months ended June 30, 2020, we recognized a reduction in revenue of $402,000 due to rent abatements to commercial tenants. Many of our leases contain non-lease components for utility reimbursement from our residents and common area maintenance from our commercial tenants. We have elected the practical expedient to combine lease and non-lease components for all asset classes. The combined components are included in lease income and are accounted for under ASC 842. The aggregate amount of future scheduled lease income on our operating leases for commercial spaces, excluding any variable lease income and non-lease components, as of June 30, 2020, was as follows:
REVENUES Revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the company expects to be entitled for those goods and services. We elected to omit disclosing the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Revenue streams that are included in revenues from contracts with customers include:
The following table presents the disaggregation of revenue streams for the three and six months ended June 30, 2020:
IMPAIRMENT OF LONG-LIVED ASSETS We evaluate our long-lived assets, including investments in real estate, for impairment indicators at least quarterly. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group, and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results. Reducing planned property holding periods may increase the likelihood of recording impairment losses. During the six months ended June 30, 2020 and 2019, we recorded no impairment charges. MORTGAGE LOANS RECEIVABLE AND NOTES RECEIVABLE In August 2017, we sold 13 multifamily communities in exchange for cash and an $11.0 million note secured by a mortgage on the assets. As of June 30, 2020, the note was paid in full. As of December 31, 2019, the balance of the note was $10.0 million, with 12 communities remaining in the pool of assets used to secure the mortgage. During the six months ended June 30, 2020 and 2019, we received and recognized approximately $279,000 and $285,000 of interest income, respectively. In July 2017, we originated a $16.2 million loan in a multifamily development located in New Hope, Minnesota, a Minneapolis suburb. We funded an additional $341,000 upon satisfaction of certain conditions set forth in the loan agreement. During the six months ended June 30, 2020, we executed the purchase option for the apartment community (refer to Note 8 for details on acquisition). This note was paid in full as part of our acquisition of this apartment community. As of December 31, 2019, the balance of the note was $16.6 million. In December 2019, we originated a $29.9 million construction loan and a $15.3 million mezzanine loan for the development of a multifamily development located in Minneapolis, Minnesota. In conjunction with the loans, we received a guaranty for the substantial completion of the project improvements from an investment grade guarantor. The construction and mezzanine loans bear interest at 4.5% and 11.5%, respectively. As of June 30, 2020 and December 31, 2019, we had funded $11.0 million and $6.2 million, respectively, of the construction loan, which appears within mortgage loans receivable in our condensed consolidated balance sheets. The loans are secured by mortgages and mature on December 31, 2023, and the agreement provides us with an option to purchase the development. The loans represent an investment in an unconsolidated variable interest entity. We are not the primary beneficiary of the variable interest entity ("VIE") as we do not have the power to direct the activities which most significantly impact the entity’s economic performance nor do we have significant influence over the entity. In March 2020, in connection with our acquisition of Ironwood, an apartment community in New Hope, Minnesota, we acquired a tax increment financing note receivable ("TIF") with a principal balance of $6.6 million. The note bears an interest rate of 4.5% with payments due in February and August of each year. VARIABLE INTEREST ENTITIES We have determined that our Operating Partnership and each of our less-than-wholly owned real estate partnerships is a VIE, as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. We are the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on our balance sheet because we have a controlling financial interest in the VIEs and have both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because our Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE. During the six months ended June 30, 2020, we acquired the 47.4% noncontrolling interests in the real estate partnership that owns 71 France for $12.2 million. MARKETABLE SECURITIES Marketable securities consisted of equity securities. We report equity securities at fair value based on quoted market prices (Level 1 inputs). Any unrealized gains or losses are included in interest and other income on the consolidated statements of operations. As of June 30, 2020, we had no marketable securities. As of December 31, 2019, the cost basis of marketable securities was $6.9 million, the gross unrealized gain was $113,000, and the carrying value was $7.1 million. During the six months ended June 30, 2020, we had a realized loss of $3.4 million.
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EARNINGS PER SHARE |
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EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of our common shares of beneficial interest (“common shares”) outstanding during the period. We have issued restricted stock units (“RSUs”) and incentive stock options ("ISOs") under our 2015 Incentive Plan and Series D Convertible Preferred Units ("Series D preferred units"), which could have a dilutive effect on our earnings per share upon exercise of the RSUs or ISOs or upon conversion of the Series D preferred units (refer to Note 4 for further discussion of the Series D preferred units). Other than the issuance of RSUs, ISOs, and Series D preferred units, we have no outstanding options, warrants, convertible stock or other contractual obligations requiring issuance of additional shares that would result in dilution of earnings. Under the terms of the Operating Partnership’s Agreement of Limited Partnership, limited partners have the right to require the Operating Partnership to redeem their limited partnership units (“Units”) any time following the first anniversary of the date they acquired such Units (“Exchange Right”). Upon the exercise of Exchange Rights, and in our sole discretion, we may issue common shares in exchange for Units on a one-for-one basis. Performance-based RSUs of 27,964 and 37,625 for the three months ended June 30, 2020 and 2019, respectively, and 27,964 and 37,625 for the six months ended June 30, 2020 and 2019, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive. For the three months ended June 30, 2020 and 2019, Series D preferred units of 228,000 and, for the six months ended June 30, 2020 and 2019, Series D preferred units of 228,000 and 157,000, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive. For the three months ended June 30, 2020 and 2019, RSUs of 13,000 and 14,000, respectively, and, for the six months ended June 30, 2020 and 2019, RSUs of 15,000 and 11,000, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive. Stock options of 63,527 and 31,764 for the three and six months ended June 30, 2020, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share plus the average unearned compensation were greater than the average market price of common shares for the periods ended and, therefore were anti-dilutive. The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for the three and six months ended June 30, 2020 and 2019:
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY AND MEZZANINE EQUITY | EQUITY AND MEZZANINE EQUITY Operating Partnership Units. The Operating Partnership had 1.0 million and 1.1 million outstanding Units at June 30, 2020 and December 31, 2019, respectively. Common Shares and Equity Awards. Common shares outstanding on June 30, 2020 and December 31, 2019, totaled 12.8 million and 12.1 million, respectively. There were 19,508 and 20,701 shares issued upon the vesting of equity awards under our 2015 Incentive Plan during the three and six months ended June 30, 2020, respectively, with a total grant-date fair value of $956,000 and $1.0 million, respectively. During the three and six months ended June 30, 2019, we issued 6,511 and 6,718 shares, respectively, with a total grant-date fair value of $447,000 and 457,000, respectively, under our 2015 Incentive Plan. These shares vest based on performance and service criteria. Equity Distribution Agreement. We have an equity distribution agreement in connection with an at-the-market offering ("2019 ATM Program") through which we may offer and sell common shares having an aggregate sales price of up to $150.0 million, in amounts and at times as we determine. The proceeds from the sale of common shares under the 2019 ATM Program are intended to be used for general purposes, which may include the funding of future acquisitions, construction or mezzanine loans, community renovations, and the repayment of indebtedness. The table below provides details on the sale of common shares during the three and six months ended June 30, 2020. As of June 30, 2020, common shares having an aggregate offering price of up to $79.5 million remained available under the 2019 ATM Program.
Exchange Rights. Pursuant to the exercise of exchange rights, we redeemed Units for cash during the three and six months ended June 30, 2020 and 2019 as detailed in the table below.
We also redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three and six months ended June 30, 2020 and 2019 as detailed in the table below.
Share Repurchase Program. On December 5, 2019, our Board of Trustees terminated the existing share repurchase program and authorized a new share repurchase program to repurchase up to $50 million of our common or preferred shares over a one-year period. Under this new repurchase program, we may repurchase common or preferred shares in open-market purchases, including pursuant to Rule 10b5-1 and Rule 10b-18 plans, as determined by management and in accordance with the requirements of the SEC. The extent to which we repurchase our shares, and the timing of repurchases, will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the executive management team. This program may be suspended or discontinued at any time. As of June 30, 2020, $44.4 million remained available under our share repurchase program. Common shares and Series C Preferred Shares repurchased during the three and six months ended June 30, 2020 and 2019 are detailed in the table below.
Series C Preferred Shares. Series C preferred shares outstanding were 3.9 million and 4.1 million shares at June 30, 2020 and December 31, 2019, respectively. The Series C preferred shares are nonvoting and redeemable for cash at $25.00 per share at our option after October 2, 2022. Holders of these shares are entitled to cumulative distributions, payable quarterly (as and if declared by the Board of Trustees). Distributions accrue at an annual rate of $1.65625 per share, which is equal to 6.625% of the $25.00 per share liquidation preference ($97.1 million liquidation preference in the aggregate). Series D Preferred Units (Mezzanine Equity). On February 26, 2019, we issued 165,600 newly created Series D preferred units at an issuance price of $100 per preferred unit as partial consideration for the acquisition of SouthFork Townhomes. The Series D preferred unit holders receive a preferred distribution at the rate of 3.862% per year. The Series D preferred units have a put option which allows the holder to redeem any or all of the Series D preferred units for cash equal to the issue price. Each Series D preferred unit is convertible, at the holder's option, into 1.37931 Units, representing a conversion exchange rate of $72.50 per unit. Changes in the redemption value are charged to common shares on our condensed consolidated balance sheets from period to period. The holders of the Series D preferred units do not have any voting rights. Distributions to Series D unitholders are presented in the condensed consolidated statements of equity within net income (loss) attributable to controlling interests and noncontrolling interests.
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT As of June 30, 2020, we owned 70 apartment communities, of which 23 served as collateral for mortgage loans. All of these mortgage loans were non-recourse to us other than for standard carve-out obligations. As of June 30, 2020, we believe that there are no material defaults or instances of noncompliance in regards to any of these mortgages payable. As of June 30, 2020, 47 of our apartment communities were not encumbered by mortgages, with 45 of those properties providing credit support for our unsecured borrowings. Our primary unsecured credit facility ("unsecured credit facility") is a revolving, multi-bank line of credit, with the Bank of Montreal serving as administrative agent. Our line of credit has total commitments of $250.0 million, with borrowing capacity based on the value of properties contained in the unencumbered asset pool ("UAP"). As of June 30, 2020, the UAP provided for a borrowing capacity of $250.0 million, with additional borrowing availability of $187.0 million beyond the $63.0 million drawn, including the balance on our operating line of credit (discussed below). The unsecured credit facility matures on August 31, 2022, with one twelve-month option to extend the maturity date at our election. Under our unsecured credit facility, we also have unsecured term loans of $70.0 million and $75.0 million, included within notes payable on the condensed consolidated balance sheets, which mature on January 15, 2024 and on August 31, 2025, respectively. The interest rates on the line of credit and term loans are based, at our option, on either the lender's base rate plus a margin, ranging from 35-85 basis points, or the London Interbank Offered Rate ("LIBOR"), plus a margin that ranges from 135-190 basis points based on our consolidated leverage ratio, as defined under our Second Amended and Restated Credit Agreement. Our unsecured credit facility and unsecured senior notes are subject to customary financial covenants and limitations. We believe that we are in compliance with all such financial covenants and limitations as of June 30, 2020. We have a private shelf agreement for the issuance of up to $150.0 million of unsecured senior promissory notes ("unsecured senior notes"). Under this agreement, we issued $75.0 million of Series A notes due September 13, 2029 bearing interest at a rate of 3.84% annually and $50.0 million of Series B notes due September 30, 2028 bearing interest at a rate of 3.69% annually. We have $25.0 million remaining available under the private shelf agreement. We also have a $6.0 million operating line of credit. This operating line of credit is designed to enhance treasury management activities and more effectively manage cash balances. This operating line matures on August 31, 2020 and has a one-year rolling commitment, with pricing based on a market spread plus the one-month LIBOR index rate. The following table summarizes our indebtedness at June 30, 2020:
The aggregate amount of required future principal payments on term loans, unsecured senior notes, and mortgages payable as of June 30, 2020, was as follows:
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DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Our objective in using interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate fluctuations. To accomplish this objective, we primarily use interest rate swap contracts to fix the variable interest rate on our term loans and a portion of our revolving line of credit. The interest rate swap contracts qualify as cash flow hedges. Under ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, the ineffective portion of a hedging instrument is not required to be recognized currently in earnings or disclosed. Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income ("OCI") and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for our interest rate swap will be reclassified to interest expense as interest expense is incurred on our term loans. During the next twelve months, we estimate an additional $4.4 million will be reclassified as an increase to interest expense. At June 30, 2020 and December 31, 2019, we had a $50.0 million interest rate swap to fix the interest rate on a portion of our primary line of credit. At June 30, 2020 and December 31, 2019, we had three interest rate swap contracts in effect with a notional amount of $195.0 million and one additional interest rate swap that becomes effective on January 31, 2023, with a notional amount of $70.0 million. The table below presents the fair value of our derivative financial instruments as well as their classification on our Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.
The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of June 30, 2020 and 2019.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Cash and cash equivalents, restricted cash, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values. In determining the fair value of other financial instruments, we apply FASB ASC 820, "Fair Value Measurement and Disclosures." Fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions about market participant assumptions (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities. Fair Value Measurements on a Recurring Basis
The fair value of our interest rate swaps is determined using the market standard methodology of netting discounted expected variable cash payments and receipts. The variable cash payments and receipts are based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves. We also consider both our own nonperformance risk and the counterparty's nonperformance risk in the fair value measurement (Level 3). Effective January 1, 2020, we elected the fair value option for our mortgage loans receivable and notes receivable, as allowed under ASU 2019-05 which provided transition relief upon adoption of ASU 2016-13, "Financial Instruments - Credit Losses." We utilize an income approach with level 3 inputs based on expected future cash flows to value these instruments. The inputs include market transactions for similar instruments, instrument specific credit risk (range of 0.5% to 1.0%), and management estimates of comparable interest rates (range of 3.75% to 5.0%). Changes in the fair value of these receivables from period to period are reported in interest and other income on our condensed consolidated statements of operations.
Fair Value Measurements on a Nonrecurring Basis There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019. Financial Assets and Liabilities Not Measured at Fair Value The fair value of mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3). The estimated fair values of our financial instruments as of June 30, 2020 and December 31, 2019, respectively, are as follows:
(2) As of January 1, 2020, we elected the fair value option, as allowed under ASU 2019-05. Fair value for these instruments is discussed within the Fair Value Measurements on a Recurring Basis section above.
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ACQUISITIONS AND DISPOSITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DISPOSITIONS | ACQUISITIONS AND DISPOSITIONS ACQUISITIONS We acquired no new real estate during the three months ended June 30, 2020, compared to $2.1 million acquisitions in the three months ended June 30, 2019. Our acquisitions during the six months ended June 30, 2020 and 2019 are detailed below. Six Months Ended June 30, 2020
Six Months Ended June 30, 2019
DISPOSITIONS During the three months ended June 30, 2020, we disposed of one parcel of unimproved land for a total sale price of $1.3 million. During the three months ended June 30, 2019, we sold one parcel of unimproved land and one commercial property for a total sale price of $7.3 million. The following tables detail our dispositions for the six months ended June 30, 2020 and 2019. Six Months Ended June 30, 2020
Six Months Ended June 30, 2019
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SEGMENT REPORTING |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | SEGMENT REPORTING We operate in a single reportable segment which includes the ownership, management, development, redevelopment, and acquisition of apartment communities. Each of our operating properties is considered a separate operating segment because each property earns revenues, incurs expenses, and has discrete financial information. Our chief operating decision-makers evaluate each property's operating results to make decisions about resources to be allocated and to assess performance and do not group the properties based on geography, size, or type for this purpose. Our apartment communities have similar long-term economic characteristics and provide similar products and services to our residents. No apartment community comprises more than 10% of consolidated revenues, profits, or assets. Accordingly, our apartment communities are aggregated into a single reportable segment. Our executive management team comprises our chief operating decision-makers. This team measures the performance of our reportable segment based on net operating income (“NOI”), which we define as total real estate revenues less property operating expenses, including real estate taxes. We believe that NOI is an important supplemental measure of operating performance for real estate because it provides a measure of operations that is unaffected by depreciation, amortization, financing, property management overhead, casualty losses, and general and administrative expense. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income, net income available for common shareholders, or cash flow from operating activities as a measure of financial performance. The following tables present NOI for the three and six months ended June 30, 2020 and 2019, respectively, along with reconciliations to net income in the condensed consolidated financial statements. Segment assets are also reconciled to total assets as reported in the condensed consolidated financial statements.
Segment Assets and Accumulated Depreciation Segment assets are summarized as follows as of June 30, 2020, and December 31, 2019, respectively, along with reconciliations to the condensed consolidated financial statements:
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation. In the ordinary course of our operations, we become involved in litigation. At this time, we know of no material pending or threatened legal proceedings, or other proceedings contemplated by governmental authorities, that would have a material impact on us. Environmental Matters. Under various federal, state, and local laws, ordinances, and regulations, a current or previous owner or operator of real estate may be liable for the costs of removal of, or remediation of, certain hazardous or toxic substances in, on, around, or under the property. While we currently have no knowledge of any material violation of environmental laws, ordinances, or regulations at any of our properties, there can be no assurance that areas of contamination will not be identified at any of our properties or that changes in environmental laws, regulations, or cleanup requirements would not result in material costs to us. Restrictions on Taxable Dispositions. Twenty-four of our properties, consisting of 4,560 apartment homes, are subject to restrictions on taxable dispositions under agreements entered into with some of the sellers or contributors of the properties and are effective for varying periods. We do not believe that the agreements materially affect the conduct of our business or our decisions whether to dispose of restricted properties during the restriction period because we generally hold these and our other properties for investment purposes rather than for sale. In addition, where we deem it to be in our shareholders' best interests to dispose of such properties, we generally seek to structure sales of such properties as tax deferred transactions under Section 1031 of the Internal Revenue Code. Otherwise, we may be required to provide tax indemnification payments to the parties to these agreements.
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SHARE-BASED COMPENSATION |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Share-based awards are provided to officers, non-officer employees, and trustees under our 2015 Incentive Plan approved by shareholders on September 15, 2015, as amended and restated on May 19, 2020 (the "2015 Incentive Plan") which allows for awards in the form of cash, unrestricted and restricted common shares, stock options, stock appreciation rights, and restricted stock units ("RSUs") up to an aggregate of 425,000 shares over the ten-year period in which the plan is in effect. Under our 2015 Incentive Plan, officers and non-officer employees may earn share awards under a long-term incentive plan, which is a forward-looking program that measures long-term performance over the stated performance period. These awards are payable to the extent deemed earned in shares. The terms of the long-term incentive awards granted under the revised program may vary from year to year. 2020 LTIP Awards Awards granted to officers on March 13, 2020, consist of an aggregate of 8,806 time-based RSU awards. All of these awards are classified as equity awards. The time-based RSU awards vest as to one-third of the shares on each of March 13, 2021, March 13, 2022, and March 13, 2023. Awards granted to officers on May 21, 2020, consist of an aggregate of 141,000 stock options, which vest as to 25% on each of May 21, 2021, January 1, 2022, January 1, 2023, and January 1, 2024. The fair value of stock options was $7.255 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
Awards granted to trustees on May 19, 2020, consist of 8,272 time-based RSUs, which vest on May 19, 2021. These awards are classified as equity awards. Share-Based Compensation Expense Share-based compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was $967,000 and $981,000 for the six months ended June 30, 2020 and 2019, respectively.
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||
BASIS OF PRESENTATION | BASIS OF PRESENTATION We conduct a majority of our business activities through our consolidated operating partnership, IRET Properties, A North Dakota Limited Partnership (the “Operating Partnership”), as well as through a number of other consolidated subsidiary entities. The accompanying condensed consolidated financial statements include our accounts and the accounts of all our subsidiaries in which we maintain a controlling interest, including the Operating Partnership. All intercompany balances and transactions are eliminated in consolidation. The condensed consolidated financial statements also reflect the Operating Partnership's ownership of certain joint venture entities in which the Operating Partnership has a general partner or controlling interest. These entities are consolidated into our operations, with noncontrolling interests reflecting the noncontrolling partners’ share of ownership, income, and expenses.
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UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS | UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Our interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows for the interim periods, have been included. The current period’s results of operations are not necessarily indicative of results which ultimately may be achieved for the year. The interim condensed consolidated financial statements and accompanying notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on February 19, 2020.
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USE OF ESTIMATES | USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS The following table provides a brief description of recent accounting standards updates (“ASUs”).
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LEASES | LEASES Effective January 1, 2019, we adopted ASUs 2016-02, 2018-10, 2018-11, 2018-20, and 2019-01 related to leases using the modified retrospective approach. We elected to adopt the package of practical expedients permitted under the transition guidance, which permits us to not reassess prior conclusions about lease identification, classification, and initial direct costs under the new standard, and the practical expedient related to land easements, which allows us to not evaluate existing or expired land easements that were not previously accounted for under ASC 840. We made an accounting policy election to exclude leases in which we are a lessee with a term of 12 months or less from the balance sheet. As a lessor, we primarily lease multifamily apartment homes which qualify as operating leases with terms that are generally one year or less. Rental revenues are recognized in accordance with ASC 842, Leases, using a method that represents a straight-line basis over the term of the lease. Rental income represents approximately 98.4% of our total revenues and includes gross market rent less adjustments for concessions, vacancy loss, and bad debt. Other property revenues represent the remaining 1.6% of our total revenues and are primarily driven by other fee income, which is typically recognized when earned, at a point in time. Some of our apartment communities have commercial spaces available for lease. Lease terms for these spaces typically range from three to fifteen years. The leases for commercial spaces generally include options to extend the lease for additional terms. Beginning in April 2020, we offered multifamily residents suffering from financial hardship related to the COVID-19 pandemic the option to apply for rent deferral. We also abated rent, common area maintenance, and tax expenses for commercial tenants that experienced government-mandated interruptions or closures of their businesses. We elected to account for these accommodations as though enforceable rights and obligations for the accommodation existed without evaluating if such a right or obligation existed under the lease agreement, as allowed by the FASB Q&A released on April 10, 2020 related to lease modification guidance under ASC 842. The accommodations were recognized as variable lease payments. As of June 30, 2020, $68,000 remained outstanding under the rent deferral agreements offered to multifamily residents. During the three months ended June 30, 2020, we recognized a reduction in revenue of $402,000 due to rent abatements to commercial tenants. Many of our leases contain non-lease components for utility reimbursement from our residents and common area maintenance from our commercial tenants. We have elected the practical expedient to combine lease and non-lease components for all asset classes. The combined components are included in lease income and are accounted for under ASC 842.
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REVENUES | REVENUES Revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration to which the company expects to be entitled for those goods and services. We elected to omit disclosing the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Revenue streams that are included in revenues from contracts with customers include:
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IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS We evaluate our long-lived assets, including investments in real estate, for impairment indicators at least quarterly. The impairment evaluation is performed on assets by property such that assets for a property form an asset group. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset group, and legal and environmental concerns. If indicators exist, we compare the expected future undiscounted cash flows for the long-lived asset group against the carrying amount of that asset group. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset group, an impairment loss is recorded for the difference between the estimated fair value and the carrying amount of the asset group. If our anticipated holding period for properties, the estimated fair value of properties, or other factors change based on market conditions or otherwise, our evaluation of impairment charges may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates, and capital requirements that could differ materially from actual results. Reducing planned property holding periods may increase the likelihood of recording impairment losses.
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VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES We have determined that our Operating Partnership and each of our less-than-wholly owned real estate partnerships is a VIE, as the limited partners or the functional equivalent of limited partners lack substantive kick-out rights and substantive participating rights. We are the primary beneficiary of the VIEs, and the VIEs are required to be consolidated on our balance sheet because we have a controlling financial interest in the VIEs and have both the power to direct the activities of the VIEs that most significantly impact the economic performance of the VIEs as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. Because our Operating Partnership is a VIE, all of our assets and liabilities are held through a VIE.
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements | The following table provides a brief description of recent accounting standards updates (“ASUs”).
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Schedule of Cash, Cash Equivalents, and Restricted Cash |
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Schedule of Cash, Cash Equivalents, and Restricted Cash |
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Future Scheduled Lease Income for Operating Leases | The aggregate amount of future scheduled lease income on our operating leases for commercial spaces, excluding any variable lease income and non-lease components, as of June 30, 2020, was as follows:
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Schedule of Disaggregation of Revenue | The following table presents the disaggregation of revenue streams for the three and six months ended June 30, 2020:
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Schedule of Equity Securities at Fair Value | Marketable securities consisted of equity securities. We report equity securities at fair value based on quoted market prices (Level 1 inputs). Any unrealized gains or losses are included in interest and other income on the consolidated statements of operations. As of June 30, 2020, we had no marketable securities. As of December 31, 2019, the cost basis of marketable securities was $6.9 million, the gross unrealized gain was $113,000, and the carrying value was $7.1 million. During the six months ended June 30, 2020, we had a realized loss of $3.4 million.
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EARNINGS PER SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerator and Denominator Used To Calculate Basic and Diluted Earnings per Share | The following table presents a reconciliation of the numerator and denominator used to calculate basic and diluted earnings per share reported in the condensed consolidated financial statements for the three and six months ended June 30, 2020 and 2019:
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EQUITY AND MEZZANINE EQUITY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Sale of Common Shares | The table below provides details on the sale of common shares during the three and six months ended June 30, 2020. As of June 30, 2020, common shares having an aggregate offering price of up to $79.5 million remained available under the 2019 ATM Program.
(1) Total consideration is net of commissions and issuance costs.
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Schedule of Conversions of Stock | Pursuant to the exercise of exchange rights, we redeemed Units for cash during the three and six months ended June 30, 2020 and 2019 as detailed in the table below.
We also redeemed Units in exchange for common shares in connection with Unitholders exercising their exchange rights during the three and six months ended June 30, 2020 and 2019 as detailed in the table below.
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Schedule of Repurchase Program | Common shares and Series C Preferred Shares repurchased during the three and six months ended June 30, 2020 and 2019 are detailed in the table below.
(1) Amount includes commissions.
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DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | ate. The following table summarizes our indebtedness at June 30, 2020:
(1) Included within notes payable on our condensed consolidated balance sh
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Aggregate Amount of Required Future Principal Payments on Mortgages Payable | The aggregate amount of required future principal payments on term loans, unsecured senior notes, and mortgages payable as of June 30, 2020, was as follows:
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DERIVATIVE INSTRUMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Derivative Instruments | The table below presents the fair value of our derivative financial instruments as well as their classification on our Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019.
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Schedule of Derivative Instruments | The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of June 30, 2020 and 2019.
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values of Financial Instruments | Fair Value Measurements on a Recurring Basis
The estimated fair values of our financial instruments as of June 30, 2020 and December 31, 2019, respectively, are as follows:
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Changes in Fair Value Receivables | Changes in the fair value of these receivables from period to period are reported in interest and other income on our condensed consolidated statements of operations.
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ACQUISITIONS AND DISPOSITIONS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquisitions | Our acquisitions during the six months ended June 30, 2020 and 2019 are detailed below. Six Months Ended June 30, 2020
Six Months Ended June 30, 2019
(1) Value of Series D preferred units at the acquisition date.
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Schedule of Dispositions | The following tables detail our dispositions for the six months ended June 30, 2020 and 2019. Six Months Ended June 30, 2020
Six Months Ended June 30, 2019
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SEGMENT REPORTING (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues and Net Operating Income for Reportable Segments | The following tables present NOI for the three and six months ended June 30, 2020 and 2019, respectively, along with reconciliations to net income in the condensed consolidated financial statements. Segment assets are also reconciled to total assets as reported in the condensed consolidated financial statements.
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Segment Assets and Accumulated Depreciation | Segment assets are summarized as follows as of June 30, 2020, and December 31, 2019, respectively, along with reconciliations to the condensed consolidated financial statements:
|
SHARE-BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Fair Value of Stock Options | The fair value of stock options was $7.255 per share and was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
|
ORGANIZATION (Details) |
Jun. 30, 2020
property
unit
|
---|---|
Real Estate Properties [Line Items] | |
Number of real estate properties | 70 |
Apartment Properties | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 70 |
Number of apartment units | unit | 12,135 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Significant Risks and Uncertainties (Details) $ in Thousands |
3 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Accounting Policies [Abstract] | |
Rent deferrals and abatements outstanding | $ 68 |
Reduction in revenue | $ (402) |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 52,714 | $ 26,579 | $ 17,406 | |
Restricted cash | 2,535 | 19,538 | 4,672 | |
Total cash, cash equivalents and restricted cash | $ 55,249 | $ 46,117 | $ 22,078 | $ 19,256 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract] | |
2020 (remainder) | $ 1,490 |
2021 | 3,044 |
2022 | 3,047 |
2023 | 2,870 |
2024 | 2,339 |
Thereafter | 5,021 |
Total | $ 17,811 |
Minimum | |
Lessor, Lease, Description [Line Items] | |
Concentration risk | 0.50% |
Term of contract | 3 years |
Maximum | |
Lessor, Lease, Description [Line Items] | |
Concentration risk | 1.00% |
Term of contract | 15 years |
Rental Income | Revenue | Product Concentration Risk | |
Lessor, Lease, Description [Line Items] | |
Concentration risk | 98.40% |
Fee Income | Revenue | Product Concentration Risk | |
Lessor, Lease, Description [Line Items] | |
Concentration risk | 1.60% |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Fixed lease income - operating leases | $ 41,910 | $ 44,342 | $ 83,843 | $ 88,084 |
Variable lease income - operating leases | 1,302 | 1,548 | 3,082 | 2,632 |
Revenues | 43,910 | 46,934 | 88,316 | 92,542 |
Other Property Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 698 | $ 1,044 | $ 1,391 | $ 1,826 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Impairment of Long-Lived Assets (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Accounting Policies [Abstract] | |
Impairment of real estate investments | $ 0 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Variable Interest Entities and Marketable Securities (Details) - USD ($) |
6 Months Ended | 20 Months Ended | |
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Marketable securities | $ 0 | ||
Payments for acquisition of noncontrolling interests – consolidated real estate entities | 12,200,000 | ||
Realized (gain) loss on marketable securities | $ 3,378,000 | $ 0 | |
Cost basis of marketable securities | $ 6,900,000 | ||
Gross unrealized gain | 113,000 | ||
71 France | Investors Real Estate Trust | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Ownership acquired | 47.40% | ||
Fair Value, Recurring | Fair Value, Inputs, Level 1 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Carrying value | $ 7,100,000 |
EQUITY AND MEZZANINE EQUITY - Sale of Common Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Average price of shares issued (in dollars per share) | $ 60.35 | $ 60.01 | $ 68.44 | $ 60.00 |
At-The-Market Offering | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of Common Shares | 624 | 674 | ||
Total Consideration | $ 44,848 | $ 48,250 | ||
Average price of shares issued (in dollars per share) | $ 71.84 | $ 71.56 |
EQUITY AND MEZZANINE EQUITY - Schedule of Conversions of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Conversion of Stock [Line Items] | ||||
Number of units converted (in shares) | 0 | 133 | 0 | 135 |
Units converted, aggregate cost | $ 9 | $ 7,968 | $ 23 | $ 8 |
Average price of shares issued (in dollars per share) | $ 60.35 | $ 60.01 | $ 68.44 | $ 60.00 |
Redemption of units for common shares | $ 0 | $ 0 | $ 0 | $ 0 |
Exercise of Exchange Rights | ||||
Conversion of Stock [Line Items] | ||||
Redemption of units for common shares (in shares) | 22 | 8 | 36 | 8 |
Redemption of units for common shares | $ 1,048 | $ (521) | $ 118 | $ (521) |
EQUITY AND MEZZANINE EQUITY - Share Repurchase Program (Details) - Share Repurchase Program - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Share Repurchase Program | ||||
Shares repurchased (in shares) | 99 | 116 | 235 | 290 |
Aggregate cost of common shares repurchased | $ 2,442 | $ 6,862 | $ 5,579 | $ 16 |
Average price per share (in dollars per share) | $ 24.75 | $ 59.12 | $ 23.73 | $ 54.03 |
DEBT - Schedule of future payments (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2020 (remainder) | $ 12,055 |
2021 | 40,395 |
2022 | 37,219 |
2023 | 45,068 |
2024 | 73,777 |
Thereafter | 386,716 |
Total payments | $ 595,230 |
DERIVATIVE INSTRUMENTS - Additional Information (Details) |
6 Months Ended | 20 Months Ended | |
---|---|---|---|
Jun. 30, 2020
USD ($)
derivative_instrument
|
Dec. 31, 2019
USD ($)
derivative_instrument
|
Jan. 31, 2023
USD ($)
derivative_instrument
|
|
Derivative [Line Items] | |||
Cash flow hedge gain (loss) to be reclassified within twelve months | $ 4,400,000 | ||
Interest Rate Swap | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Interest rate swap entered into | $ 50,000,000.0 | $ 50,000,000 | |
Number of instruments held | derivative_instrument | 3 | 3 | |
Notional amount | $ 195,000,000.0 | $ 195,000,000.0 | |
Interest Rate Swap | Designated as Hedging Instrument | Scenario, Forecast | |||
Derivative [Line Items] | |||
Number of instruments held | derivative_instrument | 1 | ||
Notional amount | $ 70,000,000.0 |
DERIVATIVE INSTRUMENTS - Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities | Interest Rate Swap | ||
Derivative [Line Items] | ||
Derivative instruments - interest rate swaps | $ 18,139 | $ 7,607 |
DERIVATIVE INSTRUMENTS - Derivative Instruments on Statement of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Derivative [Line Items] | ||||
Unrealized gain (loss) from derivative instrument | $ (1,696) | $ (4,430) | $ (11,105) | $ (6,712) |
Interest expense | 6,940 | 7,590 | 13,851 | 15,486 |
Designated as Hedging Instrument | Interest Rate Contract | ||||
Derivative [Line Items] | ||||
Unrealized gain (loss) from derivative instrument | (1,696) | (4,430) | (11,105) | (6,712) |
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest | Reclassification out of Accumulated Other Comprehensive Income | Interest Rate Contract | ||||
Derivative [Line Items] | ||||
Interest expense | $ 917 | $ (29) | $ 573 | $ (30) |
FAIR VALUE MEASUREMENTS - Changes in Fair Value of Receivables (Details) - Fair Value, Recurring $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Mortgage and note receivable | $ 17,535 |
Change in fair value of receivables | 863 |
Other Gains (Losses) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Change in fair value of receivables | 5 |
Interest Income | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Change in fair value of receivables | $ 858 |
FAIR VALUE MEASUREMENTS - Financial Assets and Liabilities Not Measured at Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
FINANCIAL LIABILITIES | ||
Mortgages payable | $ 595,230 | |
Carrying Amount | ||
FINANCIAL ASSETS | ||
Cash and cash equivalents | 52,714 | $ 26,579 |
Mortgage and note receivable | 0 | 32,810 |
FINANCIAL LIABILITIES | ||
Revolving lines of credit | 63,000 | 50,079 |
Notes payable | 270,000 | 270,000 |
Mortgages payable | 325,230 | 331,376 |
Carrying Amount | Restricted cash | ||
FINANCIAL ASSETS | ||
Cash and cash equivalents | 2,535 | 19,538 |
Fair Value | ||
FINANCIAL ASSETS | ||
Cash and cash equivalents | 52,714 | 26,579 |
Mortgage and note receivable | 0 | 32,810 |
FINANCIAL LIABILITIES | ||
Revolving lines of credit | 63,000 | 50,079 |
Notes payable | 270,000 | 270,000 |
Mortgages payable | 334,234 | 332,471 |
Fair Value | Restricted cash | ||
FINANCIAL ASSETS | ||
Cash and cash equivalents | $ 2,535 | $ 19,538 |
COMMITMENTS AND CONTINGENCIES (Details) |
Jun. 30, 2020
property
unit
|
---|---|
Real Estate Properties [Line Items] | |
Number of properties | 70 |
Subject to Restrictions on Taxable Dispositions | |
Real Estate Properties [Line Items] | |
Number of properties | 24 |
Number of apartment units | unit | 4,560 |
SHARE-BASED COMPENSATION - Schedule of Assumptions Used in Black-Scholes Pricing Model (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020
$ / shares
| |
Share-based Payment Arrangement [Abstract] | |
Exercise price (in dollars per share) | $ 66.36 |
Risk-free rate | 0.978% |
Expected term | 6 years 3 months |
Expected volatility | 21.08% |
Dividend yield | 3.974% |
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