Real Estate and Intangible Assets (Tables)
|
9 Months Ended |
Sep. 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 September 30, 2016 and December 31, 2015, excluding real estate held for sale as of September 30, 2016 and December 31, 2015, respectively (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
Real estate: |
|
|
|
|
|
Land |
|
$ |
102,101 |
|
|
$ |
97,117 |
|
|
Building |
|
644,662 |
|
|
635,728 |
|
|
Tenant improvements |
|
50,352 |
|
|
47,532 |
|
|
Accumulated depreciation |
|
(125,250 |
) |
|
(112,243 |
) |
|
Real estate, net |
|
$ |
671,865 |
|
|
$ |
668,134 |
|
|
|
| Summary of Properties Acquired |
During the nine months ended September 30, 2016, we acquired two properties, which are summarized below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
$ |
105 |
|
|
$ |
1,393 |
|
|
$ |
9,900 |
|
Fort Lauderdale, FL |
|
9/12/2016 |
|
119,224 |
|
|
9 Years |
|
2 (5 Years) |
|
23,900 |
|
|
74 |
|
|
1,974 |
|
|
14,100 |
|
Total |
|
|
|
226,286 |
|
|
|
|
|
|
$ |
40,900 |
|
|
$ |
179 |
|
|
$ |
3,367 |
|
|
$ |
24,000 |
|
During the nine months ended September 30, 2015, we acquired five properties, which are summarized below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
149 |
|
|
2,411 |
|
|
13,000 |
|
Atlanta, GA |
(2) |
7/15/2015 |
|
78,151 |
|
|
Multiple |
(2) |
2 (5 years) |
|
13,000 |
|
|
109 |
|
|
1,291 |
|
|
7,540 |
|
Total |
|
|
|
429,427 |
|
|
|
|
|
|
$ |
71,248 |
|
|
$ |
518 |
|
|
$ |
7,380 |
|
|
$ |
39,579 |
|
|
|
(1) |
The tenant occupying this property is subject to a gross lease. |
|
| 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 five properties acquired during the nine months ended September 30, 2015, as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location |
|
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 |
|
Atlanta, GA |
|
2,271 |
|
|
7,862 |
|
|
916 |
|
|
750 |
|
|
548 |
|
|
723 |
|
|
44 |
|
|
(114 |
) |
|
13,000 |
|
|
|
$ |
10,235 |
|
|
$ |
37,508 |
|
|
$ |
6,863 |
|
|
$ |
6,808 |
|
|
$ |
4,151 |
|
|
$ |
5,257 |
|
|
$ |
1,672 |
|
|
$ |
(1,246 |
) |
|
$ |
71,248 |
|
In accordance with Accounting Standards Codification, or ASC, 805, "Business Combinations," we determined the fair value of the acquired assets related to the two properties acquired during the nine months ended September 30, 2016 as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Fort Lauderdale, FL |
|
4,117 |
|
|
13,961 |
|
|
1,555 |
|
|
2,003 |
|
|
1,100 |
|
|
1,415 |
|
|
(251 |
) |
|
23,900 |
|
|
|
$ |
7,125 |
|
|
$ |
22,934 |
|
|
$ |
3,240 |
|
|
$ |
3,355 |
|
|
$ |
1,437 |
|
|
$ |
3,090 |
|
|
$ |
(281 |
) |
|
$ |
40,900 |
|
|
| Schedule of Revenue and Earnings Recognized on Properties Acquired |
Below is a summary of the total revenue and earnings recognized on the two properties acquired during the nine months ended September 30, 2016 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
|
|
|
|
2016 |
|
2016 |
|
Location |
|
Acquisition Date |
|
Rental Revenue |
|
Earnings |
|
Rental Revenue |
|
Earnings |
|
Salt Lake City, UT |
|
5/26/2016 |
|
$ |
358 |
|
|
$ |
(22 |
) |
|
$ |
497 |
|
|
$ |
(143 |
) |
(1) |
Fort Lauderdale, FL |
|
9/12/2016 |
|
106 |
|
|
(60 |
) |
(2) |
106 |
|
|
(60 |
) |
(2) |
|
|
|
|
$ |
464 |
|
|
$ |
(82 |
) |
|
$ |
603 |
|
|
$ |
(203 |
) |
|
|
|
(1) |
Includes $0.1 million of non-recurring acquisition costs.
|
|
|
(2) |
Includes $0.07 million of non-recurring acquisition costs.
|
Below is a summary of the total revenue and earnings recognized on the five properties acquired during the three and nine months ended September 30, 2015 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
|
|
|
|
2015 |
|
2015 |
|
Location |
|
Acquisition Date |
|
Rental Revenue |
|
Earnings (1) |
|
Rental Revenue |
|
Earnings (1) |
|
Richardson, TX |
|
3/6/2015 |
|
$ |
656 |
|
|
$ |
(57 |
) |
|
$ |
1,496 |
|
|
$ |
(22 |
) |
(1) |
Birmingham, AL |
|
3/20/2015 |
|
83 |
|
|
(28 |
) |
|
177 |
|
|
6 |
|
(2) |
Columbus, OH |
|
5/28/2015 |
|
177 |
|
|
(28 |
) |
|
244 |
|
|
32 |
|
(3) |
Salt Lake City, UT |
|
5/29/2015 |
|
572 |
|
|
14 |
|
|
780 |
|
|
122 |
|
(4) |
Atlanta, GA |
|
7/15/2015 |
|
274 |
|
|
28 |
|
(5) |
274 |
|
|
28 |
|
(5) |
|
|
|
|
$ |
1,762 |
|
|
$ |
(71 |
) |
|
$ |
2,971 |
|
|
$ |
166 |
|
|
|
| Pro-Forma Condensed Consolidated Statements of Operations |
The following table reflects pro-forma consolidated statements of operations as if the properties acquired during the nine months ended September 30, 2016, were acquired as of January 1, 2015, and the properties acquired during 2015, were acquired as of January 1, 2014. The pro-forma earnings for the nine months ended September 30, 2016 and 2015 were adjusted to assume that the acquisition-related costs were incurred as of the assumed acquisition date (dollars in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
|
(unaudited) |
|
(unaudited) |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Operating Data: |
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
22,012 |
|
|
$ |
22,463 |
|
|
$ |
66,406 |
|
|
$ |
67,222 |
|
Total operating expenses |
|
(15,205 |
) |
|
(13,785 |
) |
|
(42,968 |
) |
|
(41,204 |
) |
Other expenses |
|
(6,612 |
) |
|
(8,159 |
) |
|
(21,453 |
) |
|
(24,499 |
) |
Net income |
|
195 |
|
|
519 |
|
|
1,985 |
|
|
1,519 |
|
Dividends attributable to preferred and senior common stock |
|
(2,256 |
) |
|
(1,286 |
) |
|
(5,050 |
) |
|
(3,818 |
) |
Net loss attributable to common stockholders |
|
$ |
(2,061 |
) |
|
$ |
(767 |
) |
|
$ |
(3,065 |
) |
|
$ |
(2,299 |
) |
Share and Per Share Data: |
|
|
|
|
|
|
|
|
Basic and diluted loss per share of common stock - pro forma |
|
$ |
(0.09 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.11 |
) |
Basic and diluted loss per share of common stock - actual |
|
$ |
(0.10 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.13 |
) |
Weighted average shares outstanding-basic and diluted |
|
23,509,054 |
|
|
21,403,808 |
|
|
22,915,086 |
|
|
20,820,559 |
|
|
| Summary of Lease on Property |
During the nine months ended September 30, 2016, we executed seven leases, which are summarized below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Richmond, VA |
|
N/A |
|
42,213 |
|
(3) |
3 Years |
|
N/A |
|
228 |
|
|
— |
|
|
— |
|
Maple Heights, OH |
|
N/A |
|
180,000 |
|
(4) |
1 Year |
|
N/A |
|
530 |
|
|
60 |
|
|
— |
|
Burnsville, MN |
|
12/1/2016 |
|
12,663 |
|
(5) |
5.3 Years |
|
1 (5 year) |
|
143 |
|
|
— |
|
|
104 |
|
South Hadley, MA |
|
N/A |
|
150,000 |
|
(6) |
1 Year |
|
1 (1 year) |
|
288 |
|
|
— |
|
|
7 |
|
Bolingbrook, IL |
|
1/2/2017 |
|
20,719 |
|
(7) |
7.3 Years |
|
1 (5 year) |
|
107 |
|
|
204 |
|
|
48 |
|
|
|
(1) |
Tenant's lease is for 11.7% of the building. The building is now 63.5% leased.
|
|
|
(2) |
Tenant’s lease is for 24.9% of the building. The building is now 100.0% leased.
|
|
|
(3) |
Tenant extended their current lease for an additional 3 years, expiring December 2019. |
|
|
(4) |
Tenant extended their current lease for an additional year, expiring December 2019. The tenant also exercised their contraction right and downsized their square footage. The building is now 63.5% leased.
|
|
|
(5) |
Tenant's lease is for 11.0% of the building. The building is now 80.4% leased.
|
|
|
(6) |
Tenant extended their current lease for an additional year, expiring February 2018. |
|
|
(7) |
Tenant’s lease is for 37.3% of the building. The building is now 100.0% leased.
|
During the nine months ended September 30, 2015, we amended nine of our leases, which are summarized below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
5.5 Years |
|
2 (5 year) |
|
239 |
|
|
100 |
|
|
32 |
|
Columbus, OH |
|
12/1/2016 |
|
9,484 |
|
(1) |
7.1 Years |
|
N/A |
|
1,246 |
|
|
142 |
|
|
29 |
|
Raleigh, NC |
|
8/1/2015 |
|
86,886 |
|
(2) |
12.4 Years |
|
2 (5 year) |
|
534 |
|
|
800 |
|
|
398 |
|
Indianapolis, IN |
|
8/1/2015 |
|
6,903 |
|
|
3 Years |
|
N/A |
|
111 |
|
|
64 |
|
|
16 |
|
Baytown, TX |
|
9/18/2015 |
|
6,791 |
|
(3) |
7 Years |
|
2 (5 year) |
|
132 |
|
|
360 |
|
|
71 |
|
Indianapolis, IN |
|
10/1/2015 |
|
1,427 |
|
(4) |
3 Years |
|
N/A |
|
22 |
|
|
— |
|
|
4 |
|
|
|
|
|
203,538 |
|
|
|
|
|
|
3,183 |
|
|
1,530 |
|
|
722 |
|
|
|
(1) |
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.
|
|
|
(2) |
Tenant's lease is for 74.8% of the building. The building is now 93.2% 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 September 30, 2016 and December 31, 2015, excluding real estate held for sale as of September 30, 2016 and December 31, 2015, respectively (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
|
|
Lease Intangibles |
|
Accumulated Amortization |
|
Lease Intangibles |
|
Accumulated Amortization |
|
In-place leases |
|
$ |
68,681 |
|
|
$ |
(26,469 |
) |
|
$ |
66,244 |
|
|
$ |
(22,679 |
) |
|
Leasing costs |
|
45,555 |
|
|
(17,320 |
) |
|
44,360 |
|
|
(14,774 |
) |
|
Customer relationships |
|
48,774 |
|
|
(16,456 |
) |
|
46,485 |
|
|
(14,722 |
) |
|
|
|
$ |
163,010 |
|
|
$ |
(60,245 |
) |
|
$ |
157,089 |
|
|
$ |
(52,175 |
) |
|
|
|
Deferred Rent Receivable/(Liability) |
|
Accumulated (Amortization)/Accretion |
|
Deferred Rent Receivable/(Liability) |
|
Accumulated (Amortization)/Accretion |
|
Above market leases |
|
$ |
10,292 |
|
|
$ |
(7,175 |
) |
|
$ |
10,176 |
|
|
$ |
(6,818 |
) |
|
Below market leases and deferred revenue |
|
(19,813 |
) |
|
8,538 |
|
|
(17,951 |
) |
|
8,294 |
|
|
|
|
$ |
(9,521 |
) |
|
$ |
1,363 |
|
|
$ |
(7,775 |
) |
|
$ |
1,476 |
|
|
|
| Schedule of Weighted Average Amortization Period |
The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the nine months ended September 30, 2016 and 2015, respectively, were as follows:
|
|
|
|
|
|
|
Intangible Assets & Liabilities |
|
2016 |
|
2015 |
In-place leases |
|
7.9 |
|
|
11.5 |
Leasing costs |
|
7.9 |
|
|
11.5 |
Customer relationships |
|
12.2 |
|
|
16.1 |
Above market leases |
|
— |
|
|
17.2 |
Below market leases |
|
7.9 |
|
|
13.5 |
All intangible assets & liabilities |
|
9.0 |
|
|
12.9 |
|