Real Estate and Intangible Assets (Tables)
|
6 Months Ended |
Jun. 30, 2016 |
|---|
| Real Estate [Abstract] |
|
| Components of Investments in Real Estate |
The following table sets forth the components of our investments in real estate as of June 30, 2016 and December 31, 2015 (dollars in thousands):
|
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|
|
|
|
|
|
|
|
|
June 30, 2016 |
(1) |
December 31, 2015 |
(2) |
Real estate: |
|
|
|
|
|
Land |
|
$ |
99,780 |
|
|
$ |
97,117 |
|
|
Building |
|
641,266 |
|
|
635,728 |
|
|
Tenant improvements |
|
49,186 |
|
|
47,532 |
|
|
Accumulated depreciation |
|
(122,827 |
) |
|
(112,243 |
) |
|
Real estate, net |
|
$ |
667,405 |
|
|
$ |
668,134 |
|
|
|
|
(1) |
Does not include real estate held for sale as of June 30, 2016.
|
|
|
(2) |
Does not include real estate held for sale as of December 31, 2015.
|
|
| Summary of Properties Acquired |
During the six months ended June 30, 2015, we acquired four properties, which are summarized below (dollars in thousands):
|
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|
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|
|
|
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|
|
|
|
|
Location |
|
Acquisition Date |
|
Square Footage (unaudited) |
|
Lease Term |
|
Renewal Options |
|
Total Purchase Price |
|
Acquisition Expenses |
|
Annualized GAAP Rent |
|
Debt Issued |
Richardson, TX |
(1) |
3/6/2015 |
|
155,984 |
|
|
9.5 Years |
|
2 (5 years each) |
|
$ |
24,700 |
|
|
$ |
112 |
|
|
$ |
2,708 |
|
|
$ |
14,573 |
|
Birmingham, AL |
|
3/20/2015 |
|
30,850 |
|
|
8.5 Years |
|
1 (5 years) |
|
3,648 |
|
|
76 |
|
|
333 |
|
|
N/A |
|
Columbus, OH |
|
5/28/2015 |
|
78,033 |
|
|
15.0 Years |
|
2 (5 years each) |
|
7,700 |
|
|
72 |
|
|
637 |
|
|
4,466 |
|
Salt Lake City, UT |
(1) |
5/29/2015 |
|
86,409 |
|
|
6.5 Years |
|
1 (5 years) |
|
22,200 |
|
|
144 |
|
|
2,411 |
|
|
13,000 |
|
Total |
|
|
|
351,276 |
|
|
|
|
|
|
$ |
58,248 |
|
|
$ |
404 |
|
|
$ |
6,089 |
|
|
$ |
32,039 |
|
|
|
(1) |
The tenant occupying this property is subject to a gross lease. |
During the six months ended June 30, 2016, we acquired one property, which is summarized below (dollars in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
Acquisition Date |
|
Square Footage (unaudited) |
|
Lease Term |
|
Renewal Options |
|
Total Purchase Price |
|
Acquisition Expenses |
|
Annualized GAAP Rent |
|
Debt Issued |
Salt Lake City, UT |
|
5/26/2016 |
|
107,062 |
|
|
6 Years |
|
2 (3 Years and 2 Years) |
|
$ |
17,000 |
|
|
$ |
109 |
|
|
$ |
1,393 |
|
|
$ |
9,900 |
|
|
| Fair Value of Acquired Assets and Liabilities Assumed |
In accordance with ASC 805, we determined the fair value of the acquired assets and assumed liabilities related to the four properties acquired during the six months ended June 30, 2015, as follows (dollars in thousands):
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Location |
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Land |
|
Building |
|
Tenant Improvements |
|
In-place Leases |
|
Leasing Costs |
|
Customer Relationships |
|
Above Market Leases |
|
Below Market Leases |
|
Total Purchase Price |
Richardson, TX |
|
$ |
2,728 |
|
|
$ |
12,591 |
|
|
$ |
2,781 |
|
|
$ |
2,060 |
|
|
$ |
1,804 |
|
|
$ |
1,929 |
|
|
$ |
807 |
|
|
$ |
— |
|
|
$ |
24,700 |
|
Birmingham, AL |
|
650 |
|
|
1,683 |
|
|
351 |
|
|
458 |
|
|
146 |
|
|
360 |
|
|
— |
|
|
— |
|
|
3,648 |
|
Columbus, OH |
|
1,338 |
|
|
3,511 |
|
|
1,547 |
|
|
1,144 |
|
|
672 |
|
|
567 |
|
|
— |
|
|
(1,079 |
) |
|
7,700 |
|
Salt Lake City, UT |
|
3,248 |
|
|
11,861 |
|
|
1,268 |
|
|
2,396 |
|
|
981 |
|
|
1,678 |
|
|
821 |
|
|
(53 |
) |
|
22,200 |
|
|
|
$ |
7,964 |
|
|
$ |
29,646 |
|
|
$ |
5,947 |
|
|
$ |
6,058 |
|
|
$ |
3,603 |
|
|
$ |
4,534 |
|
|
$ |
1,628 |
|
|
$ |
(1,132 |
) |
|
$ |
58,248 |
|
In accordance with Accounting Standards Codification, or ASC, 805, "Business Combinations," we determined the fair value of the acquired assets related to the one property acquired during the six months ended June 30, 2016 as follows (dollars in thousands):
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|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
Location |
|
Land |
|
Building |
|
Tenant Improvements |
|
In-place Leases |
|
Leasing Costs |
|
Customer Relationships |
|
Below Market Leases |
|
Total Purchase Price |
Salt Lake City, UT |
|
$ |
3,008 |
|
|
$ |
8,973 |
|
|
$ |
1,685 |
|
|
$ |
1,352 |
|
|
$ |
337 |
|
|
$ |
1,675 |
|
|
$ |
(30 |
) |
|
$ |
17,000 |
|
|
| Schedule of Revenue and Earnings Recognized on Properties Acquired |
Below is a summary of the total revenue and earnings recognized on the four properties acquired during the three and six months ended June 30, 2015 (dollars in thousands):
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|
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|
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|
|
|
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For the three months ended June 30, |
|
For the six months ended June 30, |
|
|
|
|
2015 |
|
2015 |
Location |
|
Acquisition
Date
|
|
Rental Revenue |
|
Earnings (1) |
|
Rental Revenue |
|
Earnings (1) |
Richardson, TX |
|
3/6/2015 |
|
$ |
657 |
|
|
$ |
90 |
|
|
$ |
839 |
|
|
$ |
328 |
|
Birmingham, AL |
|
3/20/2015 |
|
83 |
|
|
(22 |
) |
|
94 |
|
|
106 |
|
Columbus, OH |
|
5/28/2015 |
|
67 |
|
|
149 |
|
|
67 |
|
|
149 |
|
Salt Lake City, UT |
|
5/29/2015 |
|
207 |
|
|
278 |
|
|
207 |
|
|
278 |
|
|
|
|
|
$ |
1,014 |
|
|
$ |
495 |
|
|
$ |
1,207 |
|
|
$ |
861 |
|
|
|
(1) |
Earnings is calculated as net income (loss) exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805. |
Below is a summary of the total revenue and earnings recognized on the one property acquired during the six months ended June 30, 2016 (dollars in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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For the three months ended June 30, |
|
For the six months ended June 30, |
|
|
|
|
2016 |
|
2016 |
Location |
|
Acquisition Date |
|
Rental Revenue |
|
Earnings (1) |
|
Rental Revenue |
|
Earnings (1) |
Salt Lake City, UT |
|
5/26/2016 |
|
$ |
139 |
|
|
$ |
35 |
|
|
$ |
139 |
|
|
$ |
35 |
|
|
|
(1) |
Earnings is calculated as net income exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805. |
|
| Pro-Forma Condensed Consolidated Statements of Operations |
The following table reflects pro-forma consolidated statements of operations as if the properties acquired during the six months ended June 30, 2016 and the twelve months ended December 31, 2015, respectively, were acquired as of January 1, 2015. The pro-forma earnings for the six months ended June 30, 2016 and 2015 were adjusted to assume that the acquisition-related costs were incurred as of the previous period (dollars in thousands, except per share amounts):
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|
|
|
|
|
|
|
|
|
|
For the three months ended June 30, |
|
For the six months ended June 30, |
|
|
(unaudited) |
|
(unaudited) |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Operating Data: |
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
21,465 |
|
|
$ |
21,955 |
|
|
$ |
43,349 |
|
|
$ |
43,420 |
|
Total operating expenses |
|
(13,485 |
) |
|
(13,382 |
) |
|
(27,005 |
) |
|
(26,037 |
) |
Other expenses |
|
(7,004 |
) |
|
(8,024 |
) |
|
(14,540 |
) |
|
(15,993 |
) |
Net income |
|
976 |
|
|
549 |
|
|
1,804 |
|
|
1,390 |
|
Dividends attributable to preferred and senior common stock |
|
(1,514 |
) |
|
(1,284 |
) |
|
(2,794 |
) |
|
(2,532 |
) |
Net loss attributable to common stockholders |
|
$ |
(538 |
) |
|
$ |
(735 |
) |
|
$ |
(990 |
) |
|
$ |
(1,142 |
) |
Share and Per Share Data: |
|
|
|
|
|
|
|
|
Basic and diluted loss per share of common stock - pro forma |
|
$ |
(0.02 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.06 |
) |
Basic and diluted loss per share of common stock - actual |
|
$ |
(0.03 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.07 |
) |
Weighted average shares outstanding-basic and diluted |
|
22,684,391 |
|
|
20,833,787 |
|
|
22,614,838 |
|
|
20,524,101 |
|
|
| Summary of Lease on Property |
During the six months ended June 30, 2015, we amended six of our leases, which are summarized below (dollars in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
New Lease
Effective Date
|
|
Square Footage
(unaudited)
|
|
New Lease
Term
|
|
Renewal
Options |
|
Annualized
GAAP Rent
|
|
Tenant
Improvement
|
|
Leasing
Commissions
|
Indianapolis, IN |
|
1/1/2015 |
|
3,546 |
|
|
8.3 Years |
|
N/A |
|
$ |
64 |
|
|
$ |
64 |
|
|
$ |
28 |
|
Indianapolis, IN |
|
2/1/2015 |
|
8,275 |
|
|
3.0 Years |
|
N/A |
|
124 |
|
|
— |
|
|
— |
|
Raleigh, NC |
|
2/1/2015 |
|
58,926 |
|
|
5.5 Years |
|
2 (5 year) |
|
711 |
|
|
— |
|
|
144 |
|
Raleigh, NC |
|
2/1/2015 |
|
21,300 |
|
(1) |
5.5 Years |
|
2 (5 year) |
|
239 |
|
|
100 |
|
|
32 |
|
Columbus, OH |
|
12/1/2016 |
|
9,484 |
|
(2) |
7.1 Years |
|
N/A |
|
1,246 |
|
|
142 |
|
|
29 |
|
Raleigh, NC |
|
8/1/2015 |
|
86,886 |
|
(3) |
12.4 Years |
|
2 (5 year) |
|
534 |
|
|
800 |
|
|
398 |
|
|
|
|
|
188,417 |
|
|
|
|
|
|
$ |
2,918 |
|
|
$ |
1,106 |
|
|
$ |
631 |
|
|
|
(1) |
Tenant’s lease is for 18.3% of the building. The building is now 93.2% leased.
|
|
|
(2) |
The anchor tenant currently occupying 92.0% of the building will expand into the remaining space, currently occupied by another tenant through November 30, 2016.
|
|
|
(3) |
Tenant's lease is for 74.8% of the building. The building is now 93.2% leased.
|
During the six months ended June 30, 2016, we executed leases on three properties, which are summarized below (dollars in thousands):
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
Lease Commencement Date |
|
Square Footage
(unaudited) |
|
Lease Term |
|
Renewal Options |
|
Annualized GAAP Rent |
|
Tenant Improvement |
|
Leasing Commissions |
Maple Heights, OH |
|
6/1/2016 |
|
40,606 |
|
(1) |
5.2 Years |
|
2 (3 year) |
|
$ |
109 |
|
|
$ |
— |
|
|
$ |
34 |
|
Bolingbrook, IL |
|
7/1/2016 |
|
13,816 |
|
(2) |
7.2 Years |
|
1 (5 year) |
|
70 |
|
|
69 |
|
|
28 |
|
Burnsville, MN |
|
12/1/2016 |
|
12,663 |
|
(3) |
5.3 Years |
|
1 (5 year) |
|
143 |
|
|
— |
|
|
104 |
|
|
|
(1) |
Tenant's lease is for 11.7% of the building. The building is now 92.8% leased.
|
|
|
(2) |
Tenant’s lease is for 24.9% of the building. The building is now 62.7% leased.
|
|
|
(3) |
Tenant's lease is for 11.0% of the building. The building is now 80.4% leased.
|
|
| Carrying Value of Intangible Assets and Accumulated Amortization |
The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of June 30, 2016 and December 31, 2015 respectively (in thousands):
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016 |
(1) |
|
December 31, 2015 |
(2) |
|
|
Lease Intangibles |
|
Accumulated Amortization |
|
|
Lease Intangibles |
|
Accumulated Amortization |
|
In-place leases |
|
$ |
67,217 |
|
|
$ |
(25,428 |
) |
|
|
$ |
66,244 |
|
|
$ |
(22,679 |
) |
|
Leasing costs |
|
44,791 |
|
|
(16,748 |
) |
|
|
44,360 |
|
|
(14,774 |
) |
|
Customer relationships |
|
48,099 |
|
|
(16,248 |
) |
|
|
46,485 |
|
|
(14,722 |
) |
|
|
|
$ |
160,107 |
|
|
$ |
(58,424 |
) |
|
|
$ |
157,089 |
|
|
$ |
(52,175 |
) |
|
|
|
Deferred Rent Receivable/(Liability) |
|
Accumulated (Amortization)/Accretion |
|
|
Deferred Rent Receivable/(Liability) |
|
Accumulated (Amortization)/Accretion |
|
Above market leases |
|
$ |
10,232 |
|
|
$ |
(7,053 |
) |
|
|
$ |
10,176 |
|
|
$ |
(6,818 |
) |
|
Below market leases and deferred revenue |
|
(17,302 |
) |
|
8,338 |
|
|
|
(17,951 |
) |
|
8,294 |
|
|
|
|
$ |
(7,070 |
) |
|
$ |
1,285 |
|
|
|
$ |
(7,775 |
) |
|
$ |
1,476 |
|
|
|
|
(1) |
Does not include real estate held for sale as of June 30, 2016.
|
|
|
(2) |
Does not include real estate held for sale as of December 31, 2015.
|
|
| Schedule of Weighted Average Amortization Period |
The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the six months ended June 30, 2016 and 2015, respectively, were as follows:
|
|
|
|
|
|
Intangible Assets & Liabilities |
|
2016 |
|
2015 |
In-place leases |
|
6.1 |
|
10.9 |
Leasing costs |
|
6.1 |
|
10.9 |
Customer relationships |
|
9.1 |
|
15.6 |
Above market leases |
|
0 |
|
18.9 |
Below market leases |
|
6.1 |
|
12.4 |
All intangible assets & liabilities |
|
6.9 |
|
12.5 |
|