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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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42-1579325
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2021 Spring Road, Suite 200, Oak Brook, Illinois
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60523
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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June 30,
2014 |
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December 31,
2013 |
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Assets
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Investment properties:
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Land
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$
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1,261,506
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$
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1,174,065
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Building and other improvements
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4,719,961
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4,586,657
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Developments in progress
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42,025
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43,796
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6,023,492
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5,804,518
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Less accumulated depreciation
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(1,390,184
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)
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(1,330,474
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)
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Net investment properties
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4,633,308
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4,474,044
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Cash and cash equivalents
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58,568
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58,190
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Investment in unconsolidated joint ventures
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7,319
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15,776
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Accounts and notes receivable (net of allowances of $7,456 and $8,197, respectively)
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79,857
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80,818
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Acquired lease intangible assets, net
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142,150
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129,561
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Assets associated with investment properties held for sale
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16,809
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8,616
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Other assets, net
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106,352
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110,571
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Total assets
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$
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5,044,363
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$
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4,877,576
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Liabilities and Equity
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Liabilities:
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Mortgages payable, net
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$
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1,736,668
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$
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1,684,633
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Unsecured notes payable
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250,000
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—
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Unsecured term loan
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450,000
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450,000
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Unsecured revolving line of credit
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55,000
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165,000
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Accounts payable and accrued expenses
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50,968
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54,457
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Distributions payable
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39,187
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39,138
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Acquired lease intangible liabilities, net
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107,827
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91,881
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Liabilities associated with investment properties held for sale
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15,167
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6,603
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Other liabilities
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68,361
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77,030
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Total liabilities
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2,773,178
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2,568,742
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Commitments and contingencies (Note 15)
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Equity:
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Preferred stock, $0.001 par value, 10,000 shares authorized, 7.00% Series A cumulative
redeemable preferred stock, 5,400 shares issued and outstanding at June 30, 2014
and December 31, 2013; liquidation preference $135,000
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5
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5
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Class A common stock, $0.001 par value, 475,000 shares authorized, 236,600 and 236,302
shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively
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237
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236
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Additional paid-in capital
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4,921,060
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4,919,633
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Accumulated distributions in excess of earnings
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(2,650,718
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)
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(2,611,796
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)
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Accumulated other comprehensive loss
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(893
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)
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(738
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)
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Total shareholders’ equity
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2,269,691
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2,307,340
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Noncontrolling interests
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1,494
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1,494
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Total equity
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2,271,185
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2,308,834
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Total liabilities and equity
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$
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5,044,363
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$
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4,877,576
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Three Months Ended June 30,
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Six Months Ended June 30,
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2014
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2013
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2014
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2013
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Revenues:
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Rental income
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$
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117,279
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$
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106,096
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$
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234,407
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$
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212,391
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Tenant recovery income
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27,108
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23,856
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56,856
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47,178
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Other property income
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1,919
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2,368
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3,831
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4,812
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Total revenues
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146,306
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132,320
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295,094
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264,381
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Expenses:
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Property operating expenses
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22,142
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21,656
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48,668
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44,239
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Real estate taxes
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19,067
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16,819
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37,481
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33,630
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Depreciation and amortization
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54,094
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59,596
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107,690
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110,604
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Provision for impairment of investment properties
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5,400
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—
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5,794
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—
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Loss on lease terminations
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827
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381
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658
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592
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General and administrative expenses
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7,362
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8,288
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15,812
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16,343
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Total expenses
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108,892
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106,740
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216,103
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205,408
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Operating income
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37,414
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25,580
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78,991
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58,973
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Gain on extinguishment of other liabilities
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—
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—
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4,258
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—
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Equity in loss of unconsolidated joint ventures, net
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(433
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(461
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(1,211
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(862
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Gain on change in control of investment properties
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24,158
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—
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24,158
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—
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Interest expense (Note 9)
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(31,873
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)
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(34,575
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(63,736
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)
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(80,272
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)
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Other income, net
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250
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2,085
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677
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3,161
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Income (loss) from continuing operations
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29,516
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(7,371
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43,137
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(19,000
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Discontinued operations:
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Income (loss), net
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—
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22,928
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(148
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23,504
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Gain on sales of investment properties
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—
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21
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655
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4,930
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Income from discontinued operations
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—
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22,949
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507
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28,434
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Gain on sales of investment properties
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527
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393
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527
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4,657
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Net income
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30,043
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15,971
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44,171
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14,091
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Net income attributable to the Company
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30,043
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15,971
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44,171
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14,091
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Preferred stock dividends
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(2,363
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)
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(2,363
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)
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(4,725
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)
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(4,725
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)
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Net income attributable to common shareholders
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$
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27,680
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$
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13,608
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$
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39,446
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$
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9,366
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Earnings (loss) per common share — basic and diluted:
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Continuing operations
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$
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0.12
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$
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(0.04
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)
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$
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0.17
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$
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(0.08
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)
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Discontinued operations
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—
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0.10
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—
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0.12
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Net income per common share attributable to common shareholders
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$
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0.12
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$
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0.06
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$
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0.17
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$
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0.04
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Net income
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$
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30,043
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$
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15,971
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$
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44,171
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$
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14,091
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Other comprehensive (loss) income:
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Net unrealized (loss) gain on derivative instruments (Note 9)
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(137
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)
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635
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(155
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)
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1,101
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Comprehensive income attributable to the Company
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$
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29,906
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$
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16,606
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$
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44,016
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$
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15,192
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Weighted average number of common shares outstanding — basic
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236,176
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233,624
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236,164
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232,117
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Weighted average number of common shares outstanding — diluted
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236,179
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233,624
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236,166
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232,117
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Preferred Stock
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Class A
Common Stock
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Class B
Common Stock
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Additional
Paid-in
Capital
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Accumulated
Distributions
in Excess of
Earnings
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Accumulated
Other
Comprehensive
(Loss) Income
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Total
Shareholders’
Equity
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Noncontrolling
Interests
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Total
Equity
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|||||||||||||||||||||||||||
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Shares
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Amount
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Shares
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Amount
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Shares
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Amount
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Balance at January 1, 2013
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5,400
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$
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5
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133,606
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$
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133
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|
|
97,037
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$
|
98
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|
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$
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4,835,370
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|
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$
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(2,460,093
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)
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$
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(1,254
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)
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$
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2,374,259
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$
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1,494
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$
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2,375,753
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Net income
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—
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—
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—
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—
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|
—
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—
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|
|
—
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14,091
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—
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|
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14,091
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—
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14,091
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|||||||||
Other comprehensive income
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—
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|
|
—
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|
|
—
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|
|
—
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|
|
—
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|
|
—
|
|
|
—
|
|
|
—
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|
|
1,101
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|
|
1,101
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|
|
—
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|
|
1,101
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|||||||||
Distributions declared to preferred shareholders ($0.9236 per share)
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—
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|
|
—
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|
|
—
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|
|
—
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|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,988
|
)
|
|
—
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|
|
(4,988
|
)
|
|
—
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|
|
(4,988
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)
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|||||||||
Distributions declared to common shareholders ($0.33125 per share)
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—
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—
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|
—
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|
—
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|
—
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|
|
—
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|
|
—
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|
|
(77,348
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)
|
|
—
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(77,348
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)
|
|
—
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|
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(77,348
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)
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|||||||||
Issuance of common stock, net of offering costs
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—
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|
|
—
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5,547
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|
5
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|
|
—
|
|
|
—
|
|
|
83,522
|
|
|
—
|
|
|
—
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|
|
83,527
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|
|
—
|
|
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83,527
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|||||||||
Issuance of restricted common stock
|
—
|
|
|
—
|
|
|
73
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Conversion of Class B common stock to Class A common stock
|
—
|
|
|
—
|
|
|
48,518
|
|
|
49
|
|
|
(48,518
|
)
|
|
(49
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Stock based compensation expense, net of shares withheld for employee taxes and forfeitures
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
270
|
|
|
—
|
|
|
—
|
|
|
270
|
|
|
—
|
|
|
270
|
|
|||||||||
Balance at June 30, 2013
|
5,400
|
|
|
$
|
5
|
|
|
187,741
|
|
|
$
|
187
|
|
|
48,519
|
|
|
$
|
49
|
|
|
$
|
4,919,162
|
|
|
$
|
(2,528,338
|
)
|
|
$
|
(153
|
)
|
|
$
|
2,390,912
|
|
|
$
|
1,494
|
|
|
$
|
2,392,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at January 1, 2014
|
5,400
|
|
|
$
|
5
|
|
|
236,302
|
|
|
$
|
236
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
4,919,633
|
|
|
$
|
(2,611,796
|
)
|
|
$
|
(738
|
)
|
|
$
|
2,307,340
|
|
|
$
|
1,494
|
|
|
$
|
2,308,834
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,171
|
|
|
—
|
|
|
44,171
|
|
|
—
|
|
|
44,171
|
|
|||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(155
|
)
|
|
(155
|
)
|
|
—
|
|
|
(155
|
)
|
|||||||||
Distributions declared to preferred shareholders ($0.875 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,725
|
)
|
|
—
|
|
|
(4,725
|
)
|
|
—
|
|
|
(4,725
|
)
|
|||||||||
Distributions declared to common shareholders ($0.33125 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78,368
|
)
|
|
—
|
|
|
(78,368
|
)
|
|
—
|
|
|
(78,368
|
)
|
|||||||||
Issuance of common stock, net of offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
(78
|
)
|
|||||||||
Issuance of restricted common stock
|
—
|
|
|
—
|
|
|
303
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||||||
Stock based compensation expense, net of shares withheld for employee taxes and forfeitures
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,505
|
|
|
—
|
|
|
—
|
|
|
1,505
|
|
|
—
|
|
|
1,505
|
|
|||||||||
Balance at June 30, 2014
|
5,400
|
|
|
$
|
5
|
|
|
236,600
|
|
|
$
|
237
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
4,921,060
|
|
|
$
|
(2,650,718
|
)
|
|
$
|
(893
|
)
|
|
$
|
2,269,691
|
|
|
$
|
1,494
|
|
|
$
|
2,271,185
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
44,171
|
|
|
$
|
14,091
|
|
Adjustments to reconcile net income to net cash provided by operating activities
(including discontinued operations):
|
|
|
|
||||
Depreciation and amortization
|
107,690
|
|
|
117,464
|
|
||
Provision for impairment of investment properties
|
5,794
|
|
|
9,176
|
|
||
Gain on sales of investment properties
|
(1,182
|
)
|
|
(9,587
|
)
|
||
Gain on extinguishment of debt
|
—
|
|
|
(26,331
|
)
|
||
Gain on extinguishment of other liabilities
|
(4,258
|
)
|
|
—
|
|
||
Gain on change in control of investment properties
|
(24,158
|
)
|
|
—
|
|
||
Loss on lease terminations
|
658
|
|
|
592
|
|
||
Amortization of loan fees, mortgage debt premium and discount on debt assumed, net
|
2,916
|
|
|
6,304
|
|
||
Equity in loss of unconsolidated joint ventures, net
|
1,211
|
|
|
862
|
|
||
Distributions on investments in unconsolidated joint ventures
|
1,360
|
|
|
4,737
|
|
||
Payment of leasing fees and inducements
|
(4,623
|
)
|
|
(6,405
|
)
|
||
Changes in accounts receivable, net
|
3,011
|
|
|
4,676
|
|
||
Changes in accounts payable and accrued expenses, net
|
(4,125
|
)
|
|
(2,625
|
)
|
||
Changes in other operating assets and liabilities, net
|
(2,047
|
)
|
|
(15,758
|
)
|
||
Other, net
|
1,269
|
|
|
4,394
|
|
||
Net cash provided by operating activities
|
127,687
|
|
|
101,590
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Changes in restricted escrows, net
|
651
|
|
|
6,866
|
|
||
Purchase of investment properties
|
(152,236
|
)
|
|
—
|
|
||
Capital expenditures and tenant improvements
|
(20,977
|
)
|
|
(21,250
|
)
|
||
Proceeds from sales of investment properties
|
78,550
|
|
|
38,961
|
|
||
Investment in developments in progress
|
(2,378
|
)
|
|
(492
|
)
|
||
Investment in unconsolidated joint ventures
|
(25
|
)
|
|
(2,254
|
)
|
||
Distributions of investments in unconsolidated joint ventures
|
—
|
|
|
836
|
|
||
Net cash (used in) provided by investing activities
|
(96,415
|
)
|
|
22,667
|
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from mortgages and notes payable
|
2,905
|
|
|
—
|
|
||
Principal payments on mortgages and notes payable
|
(89,089
|
)
|
|
(277,584
|
)
|
||
Proceeds from unsecured notes payable
|
250,000
|
|
|
—
|
|
||
Proceeds from credit facility
|
255,500
|
|
|
240,000
|
|
||
Repayments of credit facility
|
(365,500
|
)
|
|
(150,000
|
)
|
||
Payment of loan fees and deposits, net
|
(1,522
|
)
|
|
(5,299
|
)
|
||
Proceeds from issuance of common stock
|
—
|
|
|
84,835
|
|
||
Distributions paid
|
(83,044
|
)
|
|
(79,043
|
)
|
||
Other, net
|
(144
|
)
|
|
(1,660
|
)
|
||
Net cash used in financing activities
|
(30,894
|
)
|
|
(188,751
|
)
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
378
|
|
|
(64,494
|
)
|
||
Cash and cash equivalents, at beginning of period
|
58,190
|
|
|
138,069
|
|
||
Cash and cash equivalents, at end of period
|
$
|
58,568
|
|
|
$
|
73,575
|
|
(continued)
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Supplemental cash flow disclosure, including non-cash activities:
|
|
|
|
||||
Cash paid for interest
|
$
|
57,204
|
|
|
$
|
70,970
|
|
Distributions payable
|
$
|
39,187
|
|
|
$
|
41,493
|
|
Accrued capital expenditures and tenant improvements
|
$
|
3,518
|
|
|
$
|
3,523
|
|
Accrued leasing fees and inducements
|
$
|
485
|
|
|
$
|
985
|
|
Developments in progress placed in service
|
$
|
4,047
|
|
|
$
|
—
|
|
Forgiveness of mortgage debt
|
$
|
—
|
|
|
$
|
19,615
|
|
Forgiveness of accrued interest, net of escrows held by the lender
|
$
|
—
|
|
|
$
|
6,716
|
|
Shares of Class B common stock converted to Class A common stock
|
—
|
|
|
48,518
|
|
||
|
|
|
|
||||
Purchase of investment properties (after credits at closing):
|
|
|
|
||||
Land, building and other improvements, net
|
$
|
(318,666
|
)
|
|
$
|
—
|
|
Accounts receivable, acquired lease intangible and other assets
|
(29,163
|
)
|
|
—
|
|
||
Accounts payable, acquired lease intangible and other liabilities
|
24,950
|
|
|
—
|
|
||
Mortgages payable assumed, net
|
146,485
|
|
|
—
|
|
||
Gain on change in control of investment properties
|
24,158
|
|
|
—
|
|
||
|
$
|
(152,236
|
)
|
|
$
|
—
|
|
|
|
|
|
||||
Proceeds from sales of investment properties:
|
|
|
|
||||
Land, building and other improvements, net
|
$
|
75,474
|
|
|
$
|
25,468
|
|
Accounts receivable, acquired lease intangible and other assets
|
2,396
|
|
|
3,028
|
|
||
Accounts payable, acquired lease intangible and other liabilities
|
(1,044
|
)
|
|
—
|
|
||
Mortgages payable
|
—
|
|
|
(26
|
)
|
||
Deferred gain
|
542
|
|
|
904
|
|
||
Gain on sales of investment properties
|
1,182
|
|
|
9,587
|
|
||
|
$
|
78,550
|
|
|
$
|
38,961
|
|
(concluded)
|
|
|
Wholly-owned
|
|
Consolidated
Joint Ventures (a)
|
||
Operating properties (b)
|
233
|
|
|
—
|
|
Development properties
|
2
|
|
|
1
|
|
(a)
|
The Company has a
50%
ownership interest in
one
LLC.
|
(b)
|
Excludes
one
wholly-owned property classified as held for sale as of
June 30, 2014
.
|
Land
|
|
$
|
112,804
|
|
Building and other improvements
|
|
205,862
|
|
|
Acquired lease intangible assets
|
|
33,568
|
|
|
Acquired lease intangible liabilities
|
|
(20,206
|
)
|
|
Mortgages payable (a)
|
|
(146,485
|
)
|
|
Net assets acquired (b)
|
|
$
|
185,543
|
|
(a)
|
Includes mortgage premium of
$4,787
.
|
(b)
|
Net assets attributable to the MS Inland acquisitions are presented at
100%
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Total revenues
|
$
|
150,967
|
|
|
$
|
139,672
|
|
|
$
|
306,805
|
|
|
$
|
278,710
|
|
Net income
|
$
|
7,417
|
|
|
$
|
17,984
|
|
|
$
|
23,400
|
|
|
$
|
39,905
|
|
Net income attributable to Company shareholders
|
$
|
5,054
|
|
|
$
|
15,621
|
|
|
$
|
18,675
|
|
|
$
|
35,180
|
|
Earnings per share — basic and diluted
|
|
|
|
|
|
|
|
||||||||
Net income per common share attributable to common shareholders
|
$
|
0.02
|
|
|
$
|
0.07
|
|
|
$
|
0.08
|
|
|
$
|
0.15
|
|
Weighted average common shares outstanding - basic
|
236,176
|
|
|
233,624
|
|
|
236,164
|
|
|
232,117
|
|
||||
Weighted average common shares outstanding - diluted
|
236,179
|
|
|
233,624
|
|
|
236,166
|
|
|
232,117
|
|
Date
|
|
Property Name
|
|
Property Type
|
|
Square
Footage
|
|
Consideration
|
|
Aggregate
Proceeds, Net (a)
|
|
Mortgage
Debt
Extinguished
|
|
Gain
|
|||||||||
Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
May 16, 2014
|
|
Beachway Plaza & Cornerstone Plaza (b)
|
|
Multi-tenant retail
|
|
189,600
|
|
|
$
|
24,450
|
|
|
$
|
23,292
|
|
|
$
|
—
|
|
|
$
|
527
|
|
April 1, 2014
|
|
Midtown Center
|
|
Multi-tenant retail
|
|
408,500
|
|
|
47,150
|
|
|
46,043
|
|
|
—
|
|
(c)
|
—
|
|
||||
|
|
|
|
|
|
598,100
|
|
|
71,600
|
|
|
69,335
|
|
|
—
|
|
|
527
|
|
||||
Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
March 11, 2014
|
|
Riverpark Phase IIA
|
|
Single-user retail
|
|
64,300
|
|
|
9,269
|
|
|
9,204
|
|
|
—
|
|
(d)
|
655
|
|
||||
|
|
|
|
|
|
662,400
|
|
|
$
|
80,869
|
|
|
$
|
78,539
|
|
|
$
|
—
|
|
|
$
|
1,182
|
|
(a)
|
Aggregate proceeds are net of transaction costs and exclude
$11
of condemnation proceeds, which did not result in any additional gain recognition.
|
(b)
|
The terms of the disposition of Beachway Plaza and Cornerstone Plaza were negotiated as a single transaction.
|
(c)
|
The Company repaid the
$30,124
mortgage payable prior to the disposition of the property.
|
(d)
|
The Company repaid the
$6,435
mortgage payable prior to the disposition of the property.
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Assets
|
|
|
|
||||
Land, building and other improvements
|
$
|
17,567
|
|
|
$
|
10,285
|
|
Accumulated depreciation
|
(2,715
|
)
|
|
(2,206
|
)
|
||
Net investment properties
|
14,852
|
|
|
8,079
|
|
||
Other assets
|
1,957
|
|
|
537
|
|
||
Assets associated with investment properties held for sale
|
$
|
16,809
|
|
|
$
|
8,616
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Mortgages payable
|
$
|
14,475
|
|
|
$
|
6,435
|
|
Other liabilities
|
692
|
|
|
168
|
|
||
Liabilities associated with investment properties held for sale
|
$
|
15,167
|
|
|
$
|
6,603
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Rental income
|
$
|
—
|
|
|
$
|
6,705
|
|
|
$
|
(123
|
)
|
|
$
|
13,618
|
|
Tenant recovery income
|
—
|
|
|
1,396
|
|
|
144
|
|
|
3,008
|
|
||||
Other property income
|
—
|
|
|
5,441
|
|
|
23
|
|
|
5,549
|
|
||||
Total revenues
|
—
|
|
|
13,542
|
|
|
44
|
|
|
22,175
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Property operating expenses
|
—
|
|
|
1,323
|
|
|
121
|
|
|
2,972
|
|
||||
Real estate taxes
|
—
|
|
|
1,777
|
|
|
3
|
|
|
3,349
|
|
||||
Depreciation and amortization
|
—
|
|
|
3,404
|
|
|
—
|
|
|
6,860
|
|
||||
Provision for impairment of investment properties
|
—
|
|
|
9,176
|
|
|
—
|
|
|
9,176
|
|
||||
Gain on extinguishment of debt
|
—
|
|
|
(26,331
|
)
|
|
—
|
|
|
(26,331
|
)
|
||||
Interest expense
|
—
|
|
|
1,249
|
|
|
68
|
|
|
2,679
|
|
||||
Other expense (income), net
|
—
|
|
|
16
|
|
|
—
|
|
|
(34
|
)
|
||||
Total expenses, net
|
—
|
|
|
(9,386
|
)
|
|
192
|
|
|
(1,329
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations, net
|
$
|
—
|
|
|
$
|
22,928
|
|
|
$
|
(148
|
)
|
|
$
|
23,504
|
|
|
Unvested
Restricted
Shares
|
|
Weighted Average
Grant Date Fair
Value per
Restricted Share
|
|||
Balance at January 1, 2014
|
152
|
|
|
$
|
15.11
|
|
Shares granted (a)
|
303
|
|
|
$
|
13.89
|
|
Shares vested
|
(57
|
)
|
|
$
|
14.50
|
|
Shares forfeited
|
(1
|
)
|
|
$
|
15.61
|
|
Balance at June 30, 2014
|
397
|
|
|
$
|
14.27
|
|
(a)
|
Shares granted will vest ratably over periods ranging from one to
three years
in accordance with the terms of applicable award documents.
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||||
|
Aggregate Principal Balance
|
|
Weighted Average Interest Rate
|
|
Weighted Average Years to Maturity
|
|
Aggregate Principal Balance
|
|
Weighted Average Interest Rate
|
|
Weighted Average Years to Maturity
|
||||||
Fixed rate mortgages payable (a)
|
$
|
1,717,649
|
|
|
6.05
|
%
|
|
4.5
|
|
$
|
1,673,080
|
|
|
6.15
|
%
|
|
4.9
|
Variable rate construction loan (b)
|
14,264
|
|
|
2.44
|
%
|
|
0.3
|
|
11,359
|
|
|
2.44
|
%
|
|
0.8
|
||
Mortgages payable
|
1,731,913
|
|
|
6.02
|
%
|
|
4.4
|
|
1,684,439
|
|
|
6.13
|
%
|
|
4.9
|
||
Premium, net of accumulated amortization
|
5,480
|
|
|
|
|
|
|
1,175
|
|
|
|
|
|
||||
Discount, net of accumulated amortization
|
(725
|
)
|
|
|
|
|
|
(981
|
)
|
|
|
|
|
||||
Mortgages payable, net
|
$
|
1,736,668
|
|
|
|
|
|
|
$
|
1,684,633
|
|
|
|
|
|
(a)
|
Includes
$8,230
and
$8,337
of variable rate mortgage debt that was swapped to a fixed rate as of
June 30, 2014
and
December 31, 2013
, respectively, and excludes mortgages payable of
$14,475
and
$6,435
associated with investment properties classified as held for sale as of
June 30, 2014
and
December 31, 2013
, respectively. The fixed rate mortgages had interest rates ranging from
3.35%
to
8.00%
and
3.50%
to
8.00%
as of
June 30, 2014
and
December 31, 2013
, respectively.
|
(b)
|
The variable rate construction loan bears interest at a floating rate of London Interbank Offered Rate (LIBOR) plus
2.25%
.
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed rate debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mortgages payable (a)
|
$
|
9,649
|
|
|
$
|
443,372
|
|
|
$
|
68,263
|
|
|
$
|
321,692
|
|
|
$
|
13,019
|
|
|
$
|
861,654
|
|
|
$
|
1,717,649
|
|
Unsecured credit facility - fixed rate portion of term loan (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
|
300,000
|
|
|||||||
Unsecured notes payable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250,000
|
|
|
250,000
|
|
|||||||
Total fixed rate debt
|
9,649
|
|
|
443,372
|
|
|
68,263
|
|
|
321,692
|
|
|
313,019
|
|
|
1,111,654
|
|
|
2,267,649
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Variable rate debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Construction loan
|
14,264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,264
|
|
|||||||
Unsecured credit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
55,000
|
|
|
150,000
|
|
|
—
|
|
|
205,000
|
|
|||||||
Total variable rate debt
|
14,264
|
|
|
—
|
|
|
—
|
|
|
55,000
|
|
|
150,000
|
|
|
—
|
|
|
219,264
|
|
|||||||
Total debt (c)
|
$
|
23,913
|
|
|
$
|
443,372
|
|
|
$
|
68,263
|
|
|
$
|
376,692
|
|
|
$
|
463,019
|
|
|
$
|
1,111,654
|
|
|
$
|
2,486,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Weighted average interest rate on debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fixed rate debt
|
6.22
|
%
|
|
5.68
|
%
|
|
5.07
|
%
|
|
5.53
|
%
|
|
2.19
|
%
|
|
6.02
|
%
|
|
5.33
|
%
|
|||||||
Variable rate debt
|
2.44
|
%
|
|
—
|
|
|
—
|
|
|
1.66
|
%
|
|
1.61
|
%
|
|
—
|
|
|
1.68
|
%
|
|||||||
Total
|
3.96
|
%
|
|
5.68
|
%
|
|
5.07
|
%
|
|
4.97
|
%
|
|
2.00
|
%
|
|
6.02
|
%
|
|
5.01
|
%
|
(a)
|
Includes
$8,230
of variable rate mortgage debt that was swapped to a fixed rate as of
June 30, 2014
. Excludes mortgage premium of
$5,480
and discount of
$(725)
, net of accumulated amortization, which was outstanding as of
June 30, 2014
and a mortgage payable of
$14,475
associated with
one
investment property classified as held for sale as of
June 30, 2014
.
|
(b)
|
$300,000
of LIBOR-based variable rate debt has been swapped to a fixed rate through February 24, 2016. The swap effectively converts
one-month floating rate LIBOR
to a fixed rate of
0.53875%
over the term of the swap.
|
(c)
|
As of
June 30, 2014
, the weighted average years to maturity of consolidated indebtedness was
4.7 years
.
|
Unsecured Notes Payable
|
|
Maturity Date
|
|
Principal Balance as of June 30, 2014
|
|
Interest Rate/Weighted Average Interest Rate
|
|||
Series A senior notes
|
|
June 30, 2021
|
|
$
|
100,000
|
|
|
4.12
|
%
|
Series B senior notes
|
|
June 30, 2024
|
|
150,000
|
|
|
4.58
|
%
|
|
|
|
Total
|
|
$
|
250,000
|
|
|
4.40
|
%
|
Credit Facility
|
|
Maturity Date
|
|
Balance as of June 30, 2014
|
|
Interest Rate/Weighted Average Interest Rate
|
|||
Term loan - fixed rate portion (a)
|
|
May 11, 2018
|
|
$
|
300,000
|
|
|
1.99
|
%
|
Term loan - variable rate portion
|
|
May 11, 2018
|
|
150,000
|
|
|
1.61
|
%
|
|
Revolving line of credit - variable rate
|
|
May 12, 2017
|
|
55,000
|
|
|
1.66
|
%
|
|
|
|
Total
|
|
$
|
505,000
|
|
|
1.84
|
%
|
(a)
|
$300,000
of the term loan has been swapped to a fixed rate of
0.53875%
plus a margin based on a leverage grid ranging from
1.45%
to
2.00%
through February 24, 2016. The applicable margin was
1.45%
as of
June 30, 2014
.
|
|
|
Number of Instruments
|
|
Notional
|
||||||||||
Interest Rate Derivatives
|
|
June 30,
2014 |
|
December 31,
2013 |
|
June 30,
2014 |
|
December 31,
2013 |
||||||
Interest rate swaps
|
|
2
|
|
|
2
|
|
|
$
|
308,230
|
|
|
$
|
308,337
|
|
|
|
Fair Value
|
||||||
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
||||
Interest rate swaps
|
|
$
|
892
|
|
|
$
|
751
|
|
Derivatives in
Cash Flow
Hedging
Relationships
|
|
Amount of Loss (Gain)
Recognized in Other Comprehensive Income
on Derivative
(Effective Portion)
|
|
Location of Loss
Reclassified from
Accumulated Other
Comprehensive Income (AOCI) into Income
(Effective Portion)
|
|
Amount of Loss
Reclassified from
AOCI into Income
(Effective Portion)
|
|
Location of Gain
Recognized
In
Income on Derivative
(Ineffective Portion and Amount
Excluded from
Effectiveness Testing)
|
|
Amount of Gain
Recognized in Income
on Derivative
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)
|
||||||||||||||||||
Interest rate swaps
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
||||||||||||
2014
|
|
$
|
432
|
|
|
$
|
741
|
|
|
Interest expense
|
|
$
|
295
|
|
|
$
|
586
|
|
|
Other income, net
|
|
$
|
—
|
|
|
$
|
13
|
|
2013
|
|
$
|
(147
|
)
|
|
$
|
(96
|
)
|
|
Interest expense
|
|
$
|
488
|
|
|
$
|
1,005
|
|
|
Other income, net
|
|
$
|
1,085
|
|
|
$
|
932
|
|
|
|
|
|
Ownership Interest
|
|
Investment at
|
||||||||||
Joint Venture
|
|
Date of
Investment
|
|
June 30,
2014 |
|
December 31,
2013 |
|
June 30,
2014 |
|
December 31,
2013 |
||||||
MS Inland (a)
|
|
4/27/2007
|
|
—
|
%
|
|
20.0
|
%
|
|
$
|
—
|
|
|
$
|
6,915
|
|
Oak Property and Casualty LLC (b)
|
|
10/1/2006
|
|
20.0
|
%
|
|
20.0
|
%
|
|
7,319
|
|
|
8,861
|
|
||
|
|
|
|
|
|
|
|
|
|
$
|
7,319
|
|
|
$
|
15,776
|
|
(a)
|
The MS Inland joint venture was formed with a large state pension fund; the Company was the managing member of the venture and earned fees for providing property management and leasing services. The Company had the ability to exercise significant influence, but did not have financial or operating control over this joint venture, and as a result the Company accounted for its investment pursuant to the equity method of accounting. On June 5, 2014, the Company dissolved its joint venture arrangement with its partner in MS Inland through the acquisition of the
six
properties owned by the joint venture.
|
(b)
|
Oak Property & Casualty LLC (the Captive) is an insurance association owned by the Company and
four
other unaffiliated parties. The Captive was formed to insure/reimburse the members’ deductible obligations for property and general liability insurance claims subject to certain limitations. The Company entered into the Captive to stabilize insurance costs, manage exposures and recoup expenses through the function of the Captive. It has been determined that the Captive is a variable interest entity, but because the Company does not hold the power to most significantly impact the Captive’s performance, the Company is not considered the primary beneficiary. Accordingly, the Company’s investment in the Captive is accounted for pursuant to the equity method of accounting. The Company’s risk of loss is limited to its investment and the Company is not required to fund additional capital to the Captive.
|
|
|
Combined
Condensed Total
|
||||||
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Assets
|
|
|
|
|
||||
Real estate assets
|
|
$
|
—
|
|
|
$
|
270,916
|
|
Less accumulated depreciation
|
|
—
|
|
|
(52,624
|
)
|
||
Real estate, net
|
|
—
|
|
|
218,292
|
|
||
|
|
|
|
|
||||
Other assets, net
|
|
27,937
|
|
|
49,227
|
|
||
Total assets
|
|
$
|
27,937
|
|
|
$
|
267,519
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Mortgage debt
|
|
$
|
—
|
|
|
$
|
142,537
|
|
Other liabilities, net
|
|
14,447
|
|
|
22,725
|
|
||
Total liabilities
|
|
14,447
|
|
|
165,262
|
|
||
|
|
|
|
|
||||
Total equity
|
|
13,490
|
|
|
102,257
|
|
||
Total liabilities and equity
|
|
$
|
27,937
|
|
|
$
|
267,519
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
|
RioCan (a)
|
|
Hampton (b)
|
|
Other Joint
Ventures (c)
|
|
Combined
Condensed Total
|
||||||||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property related income
|
|
$
|
—
|
|
|
$
|
12,371
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,967
|
|
|
$
|
7,181
|
|
|
$
|
4,967
|
|
|
$
|
19,552
|
|
Other income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,905
|
|
|
2,050
|
|
|
1,905
|
|
|
2,050
|
|
||||||||
Total revenues
|
|
—
|
|
|
12,371
|
|
|
—
|
|
|
—
|
|
|
6,872
|
|
|
9,231
|
|
|
6,872
|
|
|
21,602
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property operating expenses
|
|
—
|
|
|
1,619
|
|
|
—
|
|
|
—
|
|
|
731
|
|
|
860
|
|
|
731
|
|
|
2,479
|
|
||||||||
Real estate taxes
|
|
—
|
|
|
1,990
|
|
|
—
|
|
|
—
|
|
|
1,027
|
|
|
1,360
|
|
|
1,027
|
|
|
3,350
|
|
||||||||
Depreciation and amortization
|
|
—
|
|
|
7,006
|
|
|
—
|
|
|
—
|
|
|
1,699
|
|
|
2,417
|
|
|
1,699
|
|
|
9,423
|
|
||||||||
Loss on lease terminations
|
|
—
|
|
|
293
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
10
|
|
|
303
|
|
||||||||
General and administrative expenses
|
|
—
|
|
|
149
|
|
|
—
|
|
|
4
|
|
|
92
|
|
|
153
|
|
|
92
|
|
|
306
|
|
||||||||
Interest expense, net
|
|
—
|
|
|
2,341
|
|
|
—
|
|
|
(232
|
)
|
|
1,258
|
|
|
1,783
|
|
|
1,258
|
|
|
3,892
|
|
||||||||
Other expense (income), net
|
|
—
|
|
|
6
|
|
|
—
|
|
|
(13
|
)
|
|
2,009
|
|
|
1,920
|
|
|
2,009
|
|
|
1,913
|
|
||||||||
Total expenses
|
|
—
|
|
|
13,404
|
|
|
—
|
|
|
(241
|
)
|
|
6,826
|
|
|
8,503
|
|
|
6,826
|
|
|
21,666
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(Loss) income from continuing operations
|
|
—
|
|
|
(1,033
|
)
|
|
—
|
|
|
241
|
|
|
46
|
|
|
728
|
|
|
46
|
|
|
(64
|
)
|
||||||||
(Loss) income from discontinued operations (d)
|
|
—
|
|
|
(369
|
)
|
|
—
|
|
|
(70
|
)
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(435
|
)
|
||||||||
Net (loss) income
|
|
$
|
—
|
|
|
$
|
(1,402
|
)
|
|
$
|
—
|
|
|
$
|
171
|
|
|
$
|
46
|
|
|
$
|
732
|
|
|
$
|
46
|
|
|
$
|
(499
|
)
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
|
RioCan (a)
|
|
Hampton (b)
|
|
Other Joint
Ventures (c)
|
|
Combined
Condensed Total
|
||||||||||||||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property related income
|
|
$
|
—
|
|
|
$
|
24,721
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,853
|
|
|
$
|
13,938
|
|
|
$
|
11,853
|
|
|
$
|
38,659
|
|
Other income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,023
|
|
|
4,074
|
|
|
4,023
|
|
|
4,074
|
|
||||||||
Total revenues
|
|
—
|
|
|
24,721
|
|
|
—
|
|
|
—
|
|
|
15,876
|
|
|
18,012
|
|
|
15,876
|
|
|
42,733
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property operating expenses
|
|
—
|
|
|
3,302
|
|
|
—
|
|
|
—
|
|
|
1,660
|
|
|
1,723
|
|
|
1,660
|
|
|
5,025
|
|
||||||||
Real estate taxes
|
|
—
|
|
|
4,033
|
|
|
—
|
|
|
—
|
|
|
2,339
|
|
|
2,667
|
|
|
2,339
|
|
|
6,700
|
|
||||||||
Depreciation and amortization
|
|
—
|
|
|
14,360
|
|
|
—
|
|
|
—
|
|
|
4,117
|
|
|
4,892
|
|
|
4,117
|
|
|
19,252
|
|
||||||||
Loss (gain) on lease terminations
|
|
—
|
|
|
832
|
|
|
—
|
|
|
—
|
|
|
(169
|
)
|
|
16
|
|
|
(169
|
)
|
|
848
|
|
||||||||
General and administrative expenses
|
|
—
|
|
|
294
|
|
|
—
|
|
|
6
|
|
|
170
|
|
|
250
|
|
|
170
|
|
|
550
|
|
||||||||
Interest expense, net
|
|
—
|
|
|
4,815
|
|
|
—
|
|
|
(1,758
|
)
|
|
3,028
|
|
|
3,566
|
|
|
3,028
|
|
|
6,623
|
|
||||||||
Other expense (income), net
|
|
—
|
|
|
6
|
|
|
—
|
|
|
(13
|
)
|
|
5,087
|
|
|
3,875
|
|
|
5,087
|
|
|
3,868
|
|
||||||||
Total expenses
|
|
—
|
|
|
27,642
|
|
|
—
|
|
|
(1,765
|
)
|
|
16,232
|
|
|
16,989
|
|
|
16,232
|
|
|
42,866
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(Loss) income from continuing operations
|
|
—
|
|
|
(2,921
|
)
|
|
—
|
|
|
1,765
|
|
|
(356
|
)
|
|
1,023
|
|
|
(356
|
)
|
|
(133
|
)
|
||||||||
(Loss) income from discontinued operations (d)
|
|
—
|
|
|
(820
|
)
|
|
—
|
|
|
(117
|
)
|
|
—
|
|
|
51
|
|
|
—
|
|
|
(886
|
)
|
||||||||
Gain on sales of investment properties - discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,019
|
|
||||||||
Net (loss) income
|
|
$
|
—
|
|
|
$
|
(3,741
|
)
|
|
$
|
—
|
|
|
$
|
2,667
|
|
|
$
|
(356
|
)
|
|
$
|
1,074
|
|
|
$
|
(356
|
)
|
|
$
|
—
|
|
(a)
|
On October 1, 2013, the Company dissolved its joint venture arrangement with its partner in RC Inland L.P. (RioCan).
|
(b)
|
During 2013, the Company dissolved its joint venture arrangement with its partner in Hampton Retail Colorado, L.L.C. (Hampton).
|
(c)
|
On June 5, 2014, the Company dissolved its joint venture arrangement with its partner in MS Inland.
|
(d)
|
Included within “(Loss) income from discontinued operations” are the following: property-level operating results attributable to the
five
properties the Company acquired from its RioCan unconsolidated joint venture on October 1, 2013; all property-level operating results attributable to the Hampton unconsolidated joint venture; and, the property-level operating results recognized by the Company’s MS Inland unconsolidated joint venture related to a property sold to the Company’s RioCan unconsolidated joint venture. The property-level operating
|
|
|
The Company’s Share of
Net Income (Loss) for the Three Months Ended June 30,
|
|
Net Cash Distributions
from/(Contributions to)
Joint Ventures for the
Three Months Ended June 30,
|
|
Fees Earned by the
Company for the
Three Months Ended June 30,
|
||||||||||||||||||
Joint Venture
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||
MS Inland (a)
|
|
$
|
68
|
|
|
$
|
188
|
|
|
$
|
605
|
|
|
$
|
501
|
|
|
$
|
127
|
|
|
$
|
190
|
|
Captive
|
|
(546
|
)
|
|
(552
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hampton (b)
|
|
—
|
|
|
167
|
|
|
—
|
|
|
839
|
|
|
—
|
|
|
—
|
|
||||||
RioCan (c)
|
|
—
|
|
|
(144
|
)
|
|
—
|
|
|
455
|
|
|
—
|
|
|
542
|
|
||||||
|
|
$
|
(478
|
)
|
|
$
|
(341
|
)
|
|
$
|
605
|
|
|
$
|
1,795
|
|
|
$
|
127
|
|
|
$
|
732
|
|
|
|
The Company’s Share of
Net Income (Loss) for the
Six Months Ended June 30,
|
|
Net Cash Distributions
from/(Contributions to)
Joint Ventures for the
Six Months Ended June 30,
|
|
Fees Earned by the
Company for the
Six Months Ended June 30,
|
||||||||||||||||||
Joint Venture
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||
MS Inland (a)
|
|
$
|
241
|
|
|
$
|
312
|
|
|
$
|
1,360
|
|
|
$
|
1,453
|
|
|
$
|
338
|
|
|
$
|
418
|
|
Captive
|
|
(1,567
|
)
|
|
(1,473
|
)
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Hampton (b)
|
|
—
|
|
|
2,576
|
|
|
—
|
|
|
855
|
|
|
—
|
|
|
1
|
|
||||||
RioCan (c)
|
|
—
|
|
|
(466
|
)
|
|
—
|
|
|
1,011
|
|
|
—
|
|
|
1,125
|
|
||||||
|
|
$
|
(1,326
|
)
|
|
$
|
949
|
|
|
$
|
1,335
|
|
|
$
|
3,319
|
|
|
$
|
338
|
|
|
$
|
1,544
|
|
(a)
|
On June 5, 2014, the Company dissolved its joint venture arrangement with its partner in MS Inland.
|
(b)
|
During the three and
six
months ended
June 30, 2013
, Hampton determined that the carrying value of certain of its assets was not recoverable and, accordingly, recorded property level impairment charges in the amounts of
$64
and
$298
, of which the Company’s share was
$62
and
$286
, respectively. The joint venture’s estimate of fair value relating to these impairment assessments was based upon bona fide purchase offers. During 2013, the Company dissolved its joint venture arrangement with its partner in Hampton.
|
(c)
|
On October 1, 2013, the Company dissolved its joint venture arrangement with its partner in RioCan.
|
Fair value of the net assets acquired at 100%
|
|
$
|
150,802
|
|
|
|
|
||
Fair value of the net assets acquired at 20%
|
|
30,160
|
|
|
Carrying value of the Company’s previous investment in the six properties acquired on June 5, 2014
|
|
(6,002
|
)
|
|
Gain on change in control of investment properties
|
|
$
|
24,158
|
|
|
|
Number of common
shares sold
|
|
Total net consideration
|
|
Average price per share
|
|||||
First quarter 2013
|
|
56
|
|
|
$
|
688
|
|
|
$
|
14.94
|
|
Second quarter 2013
|
|
5,491
|
|
|
$
|
82,839
|
|
|
$
|
15.30
|
|
Year to date June 30, 2013
|
|
5,547
|
|
|
$
|
83,527
|
|
|
$
|
15.29
|
|
|
|
|
|
|
|
|
|||||
First quarter 2014
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Second quarter 2014
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Year to date June 30, 2014
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
29,516
|
|
|
$
|
(7,371
|
)
|
|
$
|
43,137
|
|
|
$
|
(19,000
|
)
|
|
Gain on sales of investment properties
|
527
|
|
|
393
|
|
|
527
|
|
|
4,657
|
|
|
||||
Preferred stock dividends
|
(2,363
|
)
|
|
(2,363
|
)
|
|
(4,725
|
)
|
|
(4,725
|
)
|
|
||||
Income (loss) from continuing operations attributable to
common shareholders
|
27,680
|
|
|
(9,341
|
)
|
|
38,939
|
|
|
(19,068
|
)
|
|
||||
Income from discontinued operations
|
—
|
|
|
22,949
|
|
|
507
|
|
|
28,434
|
|
|
||||
Net income attributable to common shareholders
|
27,680
|
|
|
13,608
|
|
|
39,446
|
|
|
9,366
|
|
|
||||
Distributions paid on unvested restricted shares
|
(69
|
)
|
|
(15
|
)
|
|
(94
|
)
|
|
(23
|
)
|
|
||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares
|
$
|
27,611
|
|
|
$
|
13,593
|
|
|
$
|
39,352
|
|
|
$
|
9,343
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Denominator for earnings (loss) per common share — basic:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
236,176
|
|
(a)
|
233,624
|
|
(b)
|
236,164
|
|
(a)
|
232,117
|
|
(b)
|
||||
Effect of dilutive securities — stock options
|
3
|
|
(c)
|
—
|
|
(c)
|
2
|
|
(c)
|
—
|
|
(c)
|
||||
Denominator for earnings (loss) per common share — diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of common and common
equivalent shares outstanding
|
236,179
|
|
|
233,624
|
|
|
236,166
|
|
|
232,117
|
|
|
(a)
|
Excluded from these weighted average amounts are
397
shares of unvested restricted common stock, which equate to
399
and
331
shares, respectively, on a weighted average basis for the three and
six
months ended
June 30, 2014
. These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the shares are released.
|
(b)
|
Excluded from these weighted average amounts are
110
shares of unvested restricted common stock, which equate to
105
and
86
shares, respectively, on a weighted average basis for the three and
six
months ended
June 30, 2013
. These shares will continue to be excluded from the computation of basic EPS until contingencies are resolved and the shares are released.
|
(c)
|
There were outstanding options to purchase
77
and
78
shares of common stock as of
June 30, 2014
and
2013
, respectively, at a weighted average exercise price of
$19.05
and
$19.10
, respectively. Of these outstanding options,
63
and
64
shares of common stock as of
June 30, 2014
and
2013
, respectively, at a weighted average exercise price of
$20.68
and
$20.71
, respectively, have been excluded from the common shares used in calculating diluted earnings per share as including them would be anti-dilutive.
|
Property Name
|
|
Property Type
|
|
Impairment Date
|
|
Approximate
Square
Footage
|
|
Provision for
Impairment of
Investment
Properties
|
|||
Midtown Center (a)
|
|
Multi-tenant retail
|
|
March 31, 2014
|
|
408,500
|
|
|
$
|
394
|
|
Gloucester Town Center (b)
|
|
Multi-tenant retail
|
|
June 30, 2014
|
|
107,200
|
|
|
5,400
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
5,794
|
|
|
|
Estimated fair value of impaired properties as of impairment date
|
$
|
57,650
|
|
(a)
|
The Company recorded an impairment charge based upon the terms and conditions of an executed sales contract. This property was sold on April 1, 2014, but is included in continuing operations due to the Company’s early adoption of the 2014 discontinued operations pronouncement. See Note 2 for further details.
|
(b)
|
The Company recorded an impairment charge based upon the terms and conditions of a bona fide purchase offer received from an unaffiliated third party.
|
Property Name
|
|
Property Type
|
|
Impairment Date
|
|
Approximate
Square
Footage
|
|
Provision for
Impairment of
Investment
Properties
|
|||
Discontinued Operations:
|
|
|
|
|
|
|
|
|
|||
Raytheon Facility (a)
|
|
Single-user office
|
|
June 30, 2013
|
|
105,000
|
|
|
$
|
2,482
|
|
University Square (b)
|
|
Multi-tenant retail
|
|
June 30, 2013
|
|
287,000
|
|
|
6,694
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
9,176
|
|
|
|
Estimated fair value of impaired properties as of impairment date
|
$
|
11,328
|
|
(a)
|
The Company recorded an impairment charge based upon the terms and conditions of a bona fide purchase offer received from an unaffiliated third party. This property was sold on July 31, 2013.
|
(b)
|
The Company recorded an impairment charge upon re-evaluating the strategic alternatives for the property, which was sold on October 25, 2013.
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Mortgages payable, net
|
$
|
1,736,668
|
|
|
$
|
1,889,885
|
|
|
$
|
1,684,633
|
|
|
$
|
1,827,638
|
|
Unsecured notes payable
|
$
|
250,000
|
|
|
$
|
252,838
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Credit facility
|
$
|
505,000
|
|
|
$
|
506,873
|
|
|
$
|
615,000
|
|
|
$
|
617,478
|
|
Derivative liability
|
$
|
892
|
|
|
$
|
892
|
|
|
$
|
751
|
|
|
$
|
751
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
June 30, 2014
|
|
|
|
|
|
|
|
||||||||
Derivative liability
|
$
|
—
|
|
|
$
|
892
|
|
|
$
|
—
|
|
|
$
|
892
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Derivative liability
|
$
|
—
|
|
|
$
|
751
|
|
|
$
|
—
|
|
|
$
|
751
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Provision for
Impairment
|
||||||||||
June 30, 2014
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment properties (a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,500
|
|
|
$
|
10,500
|
|
|
$
|
5,400
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment properties (b)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
59,486
|
|
(a)
|
Includes impairment charges to write down the carrying value of the Company’s Gloucester Town Center investment property to estimated fair value. The estimated fair value of Gloucester Town Center of
$10,500
was based upon a bona fide purchase offer received by the Company from an unaffiliated third party (a Level 3 input).
|
(b)
|
Includes impairment charges to write down the carrying value of the Company’s Aon Hewitt East Campus, Four Peaks Plaza and Lake Mead Crossing investment properties to estimated fair value. The estimated fair value of Aon Hewitt East Campus of
$18,000
was based upon a bona fide purchase offer received by the Company from an unaffiliated third party (a Level 3 input). A change in the Company’s estimated holding period was the primary driver of the impairment charges recorded to the Company’s investments in Four Peaks Plaza and Lake Mead Crossing. The estimated fair values of Four Peaks Plaza and Lake Mead Crossing of
$14,000
and
$43,000
, respectively, were determined using the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value for a property over an estimated holding period to a present value at a risk-adjusted rate. Discount rates, growth assumptions and terminal capitalization rates utilized in this approach are derived from property-specific information, market transactions and other financial and industry data. The terminal capitalization rate and discount rate are significant inputs to this valuation. The following are the key Level 3 inputs used in estimating the fair value of Four Peaks Plaza and Lake Mead Crossing as of December 31, 2013.
|
|
|
2013
|
||
|
|
Low
|
|
High
|
Rental growth rates
|
|
Varies (i)
|
|
Varies (i)
|
Operating expense growth rates
|
|
3.27%
|
|
3.56%
|
Discount rates
|
|
7.29%
|
|
8.45%
|
Terminal capitalization rates
|
|
6.79%
|
|
8.49%
|
(i)
|
Since cash flow models are established at the tenant level, projected rental revenue growth rates fluctuate over the course of the estimated holding period based upon the timing of lease rollover, amount of available space and other property and space-specific factors.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
June 30, 2014
|
|
|
|
|
|
|
|
||||||||
Mortgages payable, net
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,889,885
|
|
|
$
|
1,889,885
|
|
Unsecured notes payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
252,838
|
|
|
$
|
252,838
|
|
Credit facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
506,873
|
|
|
$
|
506,873
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Mortgages payable, net
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,827,638
|
|
|
$
|
1,827,638
|
|
Credit facility
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
617,478
|
|
|
$
|
617,478
|
|
•
|
drew
$110,000
on its unsecured revolving line of credit and used a portion of the proceeds to repay mortgages payable with an aggregate principal balance of
$76,847
and a weighted average interest rate of
5.85%
. The Company incurred prepayment fees totaling
$4,686
related to the payoff of certain of these mortgages. The remaining proceeds were used for general corporate purposes; and
|
•
|
closed on the sale of Battle Ridge Pavilion, a
103,500
square foot multi-tenant retail property located in Marietta, Georgia for a sales price of
$14,100
and an anticipated gain on sale of approximately
$1,342
.
|
•
|
economic, business and financial conditions, and changes in our industry and changes in the real estate markets in particular;
|
•
|
economic and other developments in the Dallas-Fort Worth-Arlington area, where we have a high concentration of properties;
|
•
|
our business strategy;
|
•
|
our projected operating results;
|
•
|
rental rates and/or vacancy rates;
|
•
|
frequency and magnitude of defaults on, early terminations of or non-renewal of leases by tenants;
|
•
|
interest rates or operating costs;
|
•
|
real estate and zoning laws and changes in real property tax rates;
|
▪
|
real estate valuations, potentially resulting in impairment charges, as applicable;
|
•
|
our leverage;
|
•
|
our ability to generate sufficient cash flows to service our outstanding indebtedness;
|
•
|
our ability to obtain necessary outside financing;
|
•
|
the availability, terms and deployment of capital;
|
•
|
general volatility of the capital and credit markets and the market price of our Class A common stock;
|
•
|
risks generally associated with real estate acquisitions, dispositions and redevelopment, including the cost of construction delays and cost overruns;
|
•
|
our ability to identify properties to acquire and complete acquisitions;
|
•
|
our ability to successfully operate acquired properties;
|
•
|
our ability to effectively manage growth;
|
•
|
composition of members of our senior management team;
|
•
|
availability of or our ability to attract and retain qualified personnel;
|
•
|
our ability to make distributions to our shareholders;
|
•
|
our ability to continue to qualify as a real estate investment trust (REIT);
|
•
|
governmental regulations, tax law and rates and similar matters;
|
•
|
our compliance with laws, rules and regulations;
|
•
|
environmental uncertainties and exposure to natural disasters;
|
•
|
insurance coverage; and
|
•
|
the likelihood or actual occurrence of terrorist attacks in the U.S.
|
Description
|
|
Number of
Properties
|
|
GLA
(in thousands)
|
|
Occupancy
|
|
Percent Leased
Including Leases
Signed (a)
|
||||
Operating portfolio:
|
|
|
|
|
|
|
|
|
||||
Retail (b)
|
|
224
|
|
|
31,828
|
|
|
93.2
|
%
|
|
94.5
|
%
|
Office
|
|
8
|
|
|
1,660
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Industrial
|
|
1
|
|
|
159
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Total operating portfolio
|
|
233
|
|
|
33,647
|
|
|
93.5
|
%
|
|
94.8
|
%
|
(a)
|
Includes leases signed but not commenced.
|
(b)
|
Excludes one consolidated multi-tenant retail property classified as held for sale as of
June 30, 2014
.
|
|
|
Number of Leases Signed
|
|
GLA Signed
(in thousands)
|
|
New Contractual
Rent per Square Foot (PSF) (a)
|
|
Prior Contractual Rent PSF (a)
|
|
% Change over Prior Annualized Base Rent (ABR) (a)
|
|
Weighted Average Lease Term
|
|
Tenant Allowances PSF
|
||||||||||
Comparable Renewal Leases
|
|
271
|
|
|
1,605
|
|
|
$
|
16.09
|
|
|
$
|
15.18
|
|
|
6.0
|
%
|
|
4.96
|
|
|
$
|
0.77
|
|
Comparable New Leases
|
|
26
|
|
|
73
|
|
|
25.73
|
|
|
21.88
|
|
|
17.6
|
%
|
|
7.75
|
|
|
36.67
|
|
|||
Non-Comparable New and
Renewal Leases (b)
|
|
87
|
|
|
355
|
|
|
16.07
|
|
|
n/a
|
|
|
n/a
|
|
|
5.67
|
|
|
18.43
|
|
|||
Total
|
|
384
|
|
|
2,033
|
|
|
$
|
16.51
|
|
|
$
|
15.48
|
|
|
6.7
|
%
|
|
5.24
|
|
|
$
|
5.14
|
|
(a)
|
Total excludes the impact of Non-Comparable New and Renewal Leases.
|
(b)
|
Includes leases signed on units that were vacant for over 12 months, leases signed without fixed rental payments and leases signed where the previous and the current lease do not have a consistent lease structure.
|
•
|
the sale of two same store investment properties during the three months ended
June 30, 2014
; and
|
•
|
one same store investment property classified as held for sale as of
June 30, 2014
.
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Percentage
|
|||||||
Operating revenues:
|
|
|
|
|
|
|
|
|||||||
Same store investment properties (218 properties):
|
|
|
|
|
|
|
|
|||||||
Rental income
|
$
|
104,686
|
|
|
$
|
101,619
|
|
|
$
|
3,067
|
|
|
3.0
|
|
Tenant recovery income
|
23,702
|
|
|
22,677
|
|
|
1,025
|
|
|
4.5
|
|
|||
Other property income
|
1,713
|
|
|
1,650
|
|
|
63
|
|
|
3.8
|
|
|||
Other investment properties:
|
|
|
|
|
|
|
|
|||||||
Rental income
|
11,401
|
|
|
4,562
|
|
|
6,839
|
|
|
|
||||
Tenant recovery income
|
3,406
|
|
|
1,179
|
|
|
2,227
|
|
|
|
||||
Other property income
|
203
|
|
|
32
|
|
|
171
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Same store investment properties (218 properties):
|
|
|
|
|
|
|
|
|||||||
Property operating expenses
|
(18,359
|
)
|
|
(19,359
|
)
|
|
1,000
|
|
|
5.2
|
|
|||
Real estate taxes
|
(16,794
|
)
|
|
(15,962
|
)
|
|
(832
|
)
|
|
(5.2
|
)
|
|||
Other investment properties:
|
|
|
|
|
|
|
|
|||||||
Property operating expenses
|
(2,992
|
)
|
|
(1,352
|
)
|
|
(1,640
|
)
|
|
|
||||
Real estate taxes
|
(2,273
|
)
|
|
(857
|
)
|
|
(1,416
|
)
|
|
|
||||
Net operating income from continuing operations:
|
|
|
|
|
|
|
|
|||||||
Same store investment properties
|
94,948
|
|
|
90,625
|
|
|
4,323
|
|
|
4.8
|
|
|||
Other investment properties
|
9,745
|
|
|
3,564
|
|
|
6,181
|
|
|
|
||||
Total net operating income from continuing operations
|
104,693
|
|
|
94,189
|
|
|
10,504
|
|
|
11.2
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Other income (expense):
|
|
|
|
|
|
|
|
|||||||
Straight-line rental income, net
|
1,161
|
|
|
(222
|
)
|
|
1,383
|
|
|
|
||||
Amortization of acquired above and below market lease intangibles, net
|
230
|
|
|
172
|
|
|
58
|
|
|
|
||||
Amortization of lease inducements
|
(199
|
)
|
|
(35
|
)
|
|
(164
|
)
|
|
|
||||
Lease termination fees
|
28
|
|
|
501
|
|
|
(473
|
)
|
|
|
||||
Straight-line ground rent expense
|
(956
|
)
|
|
(760
|
)
|
|
(196
|
)
|
|
|
||||
Amortization of acquired ground lease intangible liability
|
140
|
|
|
—
|
|
|
140
|
|
|
|
||||
Depreciation and amortization
|
(54,094
|
)
|
|
(59,596
|
)
|
|
5,502
|
|
|
|
||||
Provision for impairment of investment properties
|
(5,400
|
)
|
|
—
|
|
|
(5,400
|
)
|
|
|
||||
Loss on lease terminations
|
(827
|
)
|
|
(381
|
)
|
|
(446
|
)
|
|
|
||||
General and administrative expenses
|
(7,362
|
)
|
|
(8,288
|
)
|
|
926
|
|
|
|
||||
Equity in loss of unconsolidated joint ventures, net
|
(433
|
)
|
|
(461
|
)
|
|
28
|
|
|
|
||||
Gain on change in control of investment properties
|
24,158
|
|
|
—
|
|
|
24,158
|
|
|
|
||||
Interest expense
|
(31,873
|
)
|
|
(34,575
|
)
|
|
2,702
|
|
|
|
||||
Other income, net
|
250
|
|
|
2,085
|
|
|
(1,835
|
)
|
|
|
||||
Total other expense
|
(75,177
|
)
|
|
(101,560
|
)
|
|
26,383
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Income (loss) from continuing operations
|
29,516
|
|
|
(7,371
|
)
|
|
36,887
|
|
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
|||||||
Income, net
|
—
|
|
|
22,928
|
|
|
(22,928
|
)
|
|
|
||||
Gain on sales of investment properties
|
—
|
|
|
21
|
|
|
(21
|
)
|
|
|
||||
Income from discontinued operations
|
—
|
|
|
22,949
|
|
|
(22,949
|
)
|
|
|
||||
Gain on sales of investment properties
|
527
|
|
|
393
|
|
|
134
|
|
|
|
||||
Net income
|
30,043
|
|
|
15,971
|
|
|
14,072
|
|
|
|
||||
Net income attributable to the Company
|
30,043
|
|
|
15,971
|
|
|
14,072
|
|
|
|
||||
Preferred stock dividends
|
(2,363
|
)
|
|
(2,363
|
)
|
|
—
|
|
|
|
||||
Net income attributable to common shareholders
|
$
|
27,680
|
|
|
$
|
13,608
|
|
|
$
|
14,072
|
|
|
|
•
|
rental income increased
$3,067
primarily due to an increase of $1,577 from occupancy growth, $809 from additional percentage rent and contractual rent changes and $560 from leasing spreads;
|
•
|
tenant recovery income increased $1,025 as a result of the impact of the decrease in real estate tax refunds and the increase in recoverable property operating expenses as discussed below, partially offset by negative adjustments from the common area maintenance and real estate tax reconciliation process; and
|
•
|
property operating expenses decreased
$1,000
primarily due to decreases in certain non-recoverable property operating expenses including bad debt expense of $1,609, partially offset by increases in certain recoverable property operating expenses of $609;
|
•
|
real estate taxes increased
$832
primarily due to a decrease in real estate tax refunds received, partially offset by adjustments to estimates based on actual real estate taxes paid.
|
•
|
a $24,158 increase in gain on change in control of investment properties associated with the dissolution of our MS Inland joint venture during 2014 (see Note 10); and
|
•
|
a $5,502 decrease in depreciation and amortization primarily due to the write-off of assets demolished as part of a remerchandising effort at an operating property in the second quarter of 2013, partially offset by the incremental increase due to the acquisition of properties in 2013 and 2014;
|
•
|
a $5,400 increase in provision for impairment of investment properties in continuing operations. Based on the results of our evaluations for impairment (see Notes 13 and 14 to the condensed consolidated financial statements), we recognized impairment charges of $5,400 and none for the three months ended
June 30, 2014
and
2013
, respectively.
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Percentage
|
|||||||
Operating revenues:
|
|
|
|
|
|
|
|
|||||||
Same store investment properties (218 properties):
|
|
|
|
|
|
|
|
|||||||
Rental income
|
$
|
208,724
|
|
|
$
|
203,882
|
|
|
$
|
4,842
|
|
|
2.4
|
|
Tenant recovery income
|
49,471
|
|
|
44,644
|
|
|
4,827
|
|
|
10.8
|
|
|||
Other property income
|
3,348
|
|
|
3,403
|
|
|
(55
|
)
|
|
(1.6
|
)
|
|||
Other investment properties:
|
|
|
|
|
|
|
|
|||||||
Rental income
|
22,597
|
|
|
9,112
|
|
|
13,485
|
|
|
|
||||
Tenant recovery income
|
7,385
|
|
|
2,534
|
|
|
4,851
|
|
|
|
||||
Other property income
|
350
|
|
|
84
|
|
|
266
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Same store investment properties (218 properties):
|
|
|
|
|
|
|
|
|||||||
Property operating expenses
|
(40,005
|
)
|
|
(39,742
|
)
|
|
(263
|
)
|
|
(0.7
|
)
|
|||
Real estate taxes
|
(32,891
|
)
|
|
(31,851
|
)
|
|
(1,040
|
)
|
|
(3.3
|
)
|
|||
Other investment properties:
|
|
|
|
|
|
|
|
|||||||
Property operating expenses
|
(6,965
|
)
|
|
(2,778
|
)
|
|
(4,187
|
)
|
|
|
||||
Real estate taxes
|
(4,590
|
)
|
|
(1,779
|
)
|
|
(2,811
|
)
|
|
|
||||
Net operating income from continuing operations:
|
|
|
|
|
|
|
|
|||||||
Same store investment properties
|
188,647
|
|
|
180,336
|
|
|
8,311
|
|
|
4.6
|
|
|||
Other investment properties
|
18,777
|
|
|
7,173
|
|
|
11,604
|
|
|
|
||||
Total net operating income from continuing operations
|
207,424
|
|
|
187,509
|
|
|
19,915
|
|
|
10.6
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Other income (expense):
|
|
|
|
|
|
|
|
|||||||
Straight-line rental income, net
|
3,104
|
|
|
(928
|
)
|
|
4,032
|
|
|
|
||||
Amortization of acquired above and below market lease intangibles, net
|
339
|
|
|
389
|
|
|
(50
|
)
|
|
|
||||
Amortization of lease inducements
|
(357
|
)
|
|
(64
|
)
|
|
(293
|
)
|
|
|
||||
Lease termination fees
|
133
|
|
|
1,140
|
|
|
(1,007
|
)
|
|
|
||||
Straight-line ground rent expense
|
(1,978
|
)
|
|
(1,534
|
)
|
|
(444
|
)
|
|
|
||||
Amortization of acquired ground lease intangible liability
|
280
|
|
|
—
|
|
|
280
|
|
|
|
||||
Depreciation and amortization
|
(107,690
|
)
|
|
(110,604
|
)
|
|
2,914
|
|
|
|
||||
Provision for impairment of investment properties
|
(5,794
|
)
|
|
—
|
|
|
(5,794
|
)
|
|
|
||||
Loss on lease terminations
|
(658
|
)
|
|
(592
|
)
|
|
(66
|
)
|
|
|
||||
General and administrative expenses
|
(15,812
|
)
|
|
(16,343
|
)
|
|
531
|
|
|
|
||||
Gain on extinguishment of other liabilities
|
4,258
|
|
|
—
|
|
|
4,258
|
|
|
|
||||
Equity in loss of unconsolidated joint ventures, net
|
(1,211
|
)
|
|
(862
|
)
|
|
(349
|
)
|
|
|
||||
Gain on change in control of investment properties
|
24,158
|
|
|
—
|
|
|
24,158
|
|
|
|
||||
Interest expense
|
(63,736
|
)
|
|
(80,272
|
)
|
|
16,536
|
|
|
|
||||
Other income, net
|
677
|
|
|
3,161
|
|
|
(2,484
|
)
|
|
|
||||
Total other expense
|
(164,287
|
)
|
|
(206,509
|
)
|
|
42,222
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Income (loss) from continuing operations
|
43,137
|
|
|
(19,000
|
)
|
|
62,137
|
|
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
|||||||
(Loss) income, net
|
(148
|
)
|
|
23,504
|
|
|
(23,652
|
)
|
|
|
||||
Gain on sales of investment properties
|
655
|
|
|
4,930
|
|
|
(4,275
|
)
|
|
|
||||
Income from discontinued operations
|
507
|
|
|
28,434
|
|
|
(27,927
|
)
|
|
|
||||
Gain on sales of investment properties
|
527
|
|
|
4,657
|
|
|
(4,130
|
)
|
|
|
||||
Net income
|
44,171
|
|
|
14,091
|
|
|
30,080
|
|
|
|
||||
Net income attributable to the Company
|
44,171
|
|
|
14,091
|
|
|
30,080
|
|
|
|
||||
Preferred stock dividends
|
(4,725
|
)
|
|
(4,725
|
)
|
|
—
|
|
|
|
||||
Net income attributable to common shareholders
|
$
|
39,446
|
|
|
$
|
9,366
|
|
|
$
|
30,080
|
|
|
|
•
|
rental income increased
$4,842
primarily due to an increase of $3,162 from occupancy growth, $1,087 from leasing spreads and $735 from contractual rent changes; and
|
•
|
tenant recovery income increased $4,827 as a result of the impact of the increase in recoverable property operating expenses and real estate taxes as discussed below and negative adjustments from the common area maintenance and real estate tax reconciliation process in 2013;
|
•
|
real estate taxes increased
$1,040
primarily due to a decrease in real estate tax refunds received; and
|
•
|
property operating expenses increased
$263
primarily due to an increase in certain recoverable property operating expenses of $2,251, partially offset by decreases in certain non-recoverable property operating expenses including bad debt expense of $1,988.
|
•
|
a $24,158 increase in gain on change in control of investment properties associated with the dissolution of our MS Inland joint venture during 2014 (see Note 10);
|
•
|
a
$16,536
decrease in interest expense primarily consisting of:
|
•
|
a $9,020 decrease in interest on mortgages payable due to the repayment of mortgage debt; and
|
•
|
the 2013 payment of $6,250 in prepayment penalties and the write-off of $2,492 in non-cash loan fees related to the repayment of the IW JV 2009, LLC senior and junior mezzanine notes, compared to the 2014 payment of $3,474 in prepayment penalties and the write-off of $154 in non-cash loan fees related to the repayment of mortgage debt; and
|
•
|
an increase in gain on extinguishment of other liabilities of $4,258, with such amount recognized in conjunction with the acquisition of the fee interest in one of our existing investment properties that was previously subject to a ground lease with a third party. The amount recognized represents the reversal of a straight-line ground rent liability associated with the ground lease;
|
•
|
a $5,794 increase in provision for impairment of investment properties in continuing operations. Based on the results of our evaluations for impairment (see Notes 13 and 14 to the condensed consolidated financial statements), we recognized impairment charges of $5,794 and none for the
six
months ended
June 30, 2014
and
2013
, respectively.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income attributable to common shareholders
|
$
|
27,680
|
|
|
$
|
13,608
|
|
|
$
|
39,446
|
|
|
$
|
9,366
|
|
Depreciation and amortization
|
55,357
|
|
|
65,753
|
|
|
109,600
|
|
|
123,125
|
|
||||
Provision for impairment of investment properties
|
5,400
|
|
|
9,238
|
|
|
5,794
|
|
|
9,462
|
|
||||
Gain on sales of investment properties (a)
|
(24,685
|
)
|
|
(414
|
)
|
|
(25,340
|
)
|
|
(10,564
|
)
|
||||
FFO
|
$
|
63,752
|
|
|
$
|
88,185
|
|
|
$
|
129,500
|
|
|
$
|
131,389
|
|
|
|
|
|
|
|
|
|
||||||||
Impact on earnings from the early extinguishment of debt, net
|
1,951
|
|
|
(26,483
|
)
|
|
3,631
|
|
|
(19,150
|
)
|
||||
Joint venture investment impairment
|
—
|
|
|
134
|
|
|
—
|
|
|
1,834
|
|
||||
Provision for hedge ineffectiveness
|
—
|
|
|
(1,085
|
)
|
|
(13
|
)
|
|
(932
|
)
|
||||
Gain on extinguishment of other liabilities
|
—
|
|
|
—
|
|
|
(4,258
|
)
|
|
—
|
|
||||
Other
|
(11
|
)
|
|
(150
|
)
|
|
(126
|
)
|
|
(350
|
)
|
||||
Operating FFO
|
$
|
65,692
|
|
|
$
|
60,601
|
|
|
$
|
128,734
|
|
|
$
|
112,791
|
|
(a)
|
Includes the gain on change in control of investment properties of $24,158 recognized pursuant to the dissolution of our joint venture arrangement with our partner in our MS Inland unconsolidated joint venture on June 5, 2014.
|
|
SOURCES
|
|
|
USES
|
▪
|
Cash and cash equivalents
|
|
|
Short-Term:
|
▪
|
Operating cash flow
|
|
▪
|
Tenant allowances and leasing costs
|
▪
|
Available borrowings under our unsecured revolving
|
|
▪
|
Improvements made to individual properties that are not
|
|
line of credit
|
|
|
recoverable through common area maintenance charges to tenants
|
▪
|
Asset sales
|
|
▪
|
Debt repayment requirements
|
▪
|
Proceeds from capital markets transactions
|
|
▪
|
Distribution payments
|
|
|
|
▪
|
Acquisitions
|
|
|
|
|
|
|
|
|
|
Long-Term:
|
|
|
|
▪
|
Major redevelopment, renovation or expansion activities
|
|
|
|
▪
|
New development
|
Debt
|
|
Aggregate Principal Amount at
June 30, 2014
|
|
Weighted
Average
Interest Rate
|
|
Weighted Average
Years to Maturity
|
|||
Fixed rate mortgages payable (a)
|
|
$
|
1,717,649
|
|
|
6.05
|
%
|
|
4.5 years
|
Variable rate construction loan
|
|
14,264
|
|
|
2.44
|
%
|
|
0.3 years
|
|
Total mortgages payable
|
|
1,731,913
|
|
|
6.02
|
%
|
|
4.4 years
|
|
Premium, net of accumulated amortization
|
|
5,480
|
|
|
|
|
|
||
Discount, net of accumulated amortization
|
|
(725
|
)
|
|
|
|
|
||
Total mortgages payable, net
|
|
1,736,668
|
|
|
|
|
|
||
Unsecured notes payable:
|
|
|
|
|
|
|
|||
Series A senior notes
|
|
100,000
|
|
|
4.12
|
%
|
|
7.0 years
|
|
Series B senior notes
|
|
150,000
|
|
|
4.58
|
%
|
|
10.0 years
|
|
Total unsecured notes payable
|
|
250,000
|
|
|
4.40
|
%
|
|
8.8 years
|
|
Unsecured credit facility:
|
|
|
|
|
|
|
|||
Fixed rate portion of term loan (b)
|
|
300,000
|
|
|
1.99
|
%
|
|
3.9 years
|
|
Variable rate portion of term loan
|
|
150,000
|
|
|
1.61
|
%
|
|
3.9 years
|
|
Variable rate revolving line of credit
|
|
55,000
|
|
|
1.66
|
%
|
|
2.9 years
|
|
Total unsecured credit facility
|
|
505,000
|
|
|
1.84
|
%
|
|
3.8 years
|
|
|
|
|
|
|
|
|
|||
Total consolidated indebtedness, net
|
|
$
|
2,491,668
|
|
|
5.01
|
%
|
|
4.7 years
|
(a)
|
Includes
$8,230
of variable rate mortgage debt that was swapped to a fixed rate as of
June 30, 2014
. Excludes a mortgage payable of $14,475 associated with one investment property classified as held for sale as of
June 30, 2014
.
|
(b)
|
Reflects $300,000 of variable rate debt that matures in May 2018 that is swapped to a fixed rate through February 2016.
|
Unsecured Notes Payable
|
|
Maturity Date
|
|
Principal Balance as of June 30, 2014
|
|
Interest Rate/Weighted Average Interest Rate
|
|||
Series A senior notes
|
|
June 30, 2021
|
|
$
|
100,000
|
|
|
4.12
|
%
|
Series B senior notes
|
|
June 30, 2024
|
|
150,000
|
|
|
4.58
|
%
|
|
|
|
Total
|
|
$
|
250,000
|
|
|
4.40
|
%
|
Credit Facility
|
|
Maturity Date
|
|
Balance as of June 30, 2014
|
|
Interest Rate/Weighted Average Interest Rate
|
|||
Term loan - fixed rate portion (a)
|
|
May 11, 2018
|
|
$
|
300,000
|
|
|
1.99
|
%
|
Term loan - variable rate portion
|
|
May 11, 2018
|
|
150,000
|
|
|
1.61
|
%
|
|
Revolving line of credit - variable rate
|
|
May 12, 2017
|
|
55,000
|
|
|
1.66
|
%
|
|
|
|
Total
|
|
$
|
505,000
|
|
|
1.84
|
%
|
(a)
|
$300,000 of the term loan has been swapped to a fixed rate of 0.53875% plus a margin based on a leverage grid ranging from 1.45% to 2.00% through February 24, 2016. The applicable margin was 1.45% as of
June 30, 2014
.
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
||||||||||||||||
Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed rate debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mortgages payable (a)
|
$
|
9,649
|
|
|
$
|
443,372
|
|
|
$
|
68,263
|
|
|
$
|
321,692
|
|
|
$
|
13,019
|
|
|
$
|
861,654
|
|
|
$
|
1,717,649
|
|
|
$
|
1,875,621
|
|
Unsecured credit facility - fixed rate portion of term loan (b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
|
300,000
|
|
|
301,144
|
|
||||||||
Unsecured notes payable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
250,000
|
|
|
250,000
|
|
|
252,838
|
|
||||||||
Total fixed rate debt
|
9,649
|
|
|
443,372
|
|
|
68,263
|
|
|
321,692
|
|
|
313,019
|
|
|
1,111,654
|
|
|
2,267,649
|
|
|
2,429,603
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Variable rate debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Construction loan
|
14,264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,264
|
|
|
14,264
|
|
||||||||
Unsecured credit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
55,000
|
|
|
150,000
|
|
|
—
|
|
|
205,000
|
|
|
205,729
|
|
||||||||
Total variable rate debt
|
14,264
|
|
|
—
|
|
|
—
|
|
|
55,000
|
|
|
150,000
|
|
|
—
|
|
|
219,264
|
|
|
219,993
|
|
||||||||
Total debt (c)
|
$
|
23,913
|
|
|
$
|
443,372
|
|
|
$
|
68,263
|
|
|
$
|
376,692
|
|
|
$
|
463,019
|
|
|
$
|
1,111,654
|
|
|
$
|
2,486,913
|
|
|
$
|
2,649,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted average interest rate on debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed rate debt
|
6.22
|
%
|
|
5.68
|
%
|
|
5.07
|
%
|
|
5.53
|
%
|
|
2.19
|
%
|
|
6.02
|
%
|
|
5.33
|
%
|
|
|
|||||||||
Variable rate debt
|
2.44
|
%
|
|
—
|
|
|
—
|
|
|
1.66
|
%
|
|
1.61
|
%
|
|
—
|
|
|
1.68
|
%
|
|
|
|||||||||
Total
|
3.96
|
%
|
|
5.68
|
%
|
|
5.07
|
%
|
|
4.97
|
%
|
|
2.00
|
%
|
|
6.02
|
%
|
|
5.01
|
%
|
|
|
(a)
|
Includes
$8,230
of variable rate mortgage debt that was swapped to a fixed rate as of
June 30, 2014
. Excludes mortgage premium of
$5,480
and discount of
$(725)
, net of accumulated amortization, which was outstanding as of
June 30, 2014
and a mortgage payable of $14,475 associated with one investment property classified as held for sale as of
June 30, 2014
.
|
(b)
|
$300,000 of LIBOR-based variable rate debt has been swapped to a fixed rate through February 24, 2016. The swap effectively converts one-month floating rate LIBOR to a fixed rate of 0.53875% over the term of the swap.
|
(c)
|
As of
June 30, 2014
, the weighted average years to maturity of consolidated indebtedness was
4.7 years
.
|
Location
|
|
Property Name
|
|
Our Ownership Percentage
|
|
Carrying Value at
June 30, 2014
|
|
Construction Loan Balance at
June 30, 2014
|
||||
Henderson, Nevada
|
|
Green Valley Crossing
|
|
50.0%
|
|
$
|
2,551
|
|
|
$
|
14,264
|
|
Billings, Montana
|
|
South Billings Center
|
|
100.0%
|
|
5,154
|
|
|
—
|
|
||
Nashville, Tennessee
|
|
Bellevue Mall
|
|
100.0%
|
|
23,460
|
|
|
—
|
|
||
Henderson, Nevada
|
|
Lake Mead Crossing
|
|
100.0%
|
|
10,860
|
|
|
—
|
|
||
|
|
|
|
|
|
$
|
42,025
|
|
(a)
|
$
|
14,264
|
|
(a)
|
Total excludes $30,188 of costs, net of accumulated depreciation, placed in service, $4,047 of which was placed in service during the
six
months ended
June 30, 2014
based upon substantial completion of construction of an approximately 25,000 square foot anchor space leased to a grocer tenant at Green Valley Crossing. As of
June 30, 2014
, the ABR from the portion of our development properties with respect to which construction has been completed and placed in service was $2,040.
|
|
|
Number of
Assets Sold
|
|
Square Footage
|
|
Consideration
|
|
Total
Mortgage Debt
Extinguished (a)
|
|
Net Sales
Proceeds (b)
|
||||||||
2014 Dispositions (through June 30, 2014)
|
|
4
|
|
|
662,400
|
|
|
$
|
80,869
|
|
|
$
|
—
|
|
|
$
|
78,539
|
|
2013 Dispositions
|
|
20
|
|
|
2,833,900
|
|
|
$
|
328,045
|
|
|
$
|
—
|
|
|
$
|
320,574
|
|
(a)
|
Excludes mortgages payable repaid prior to disposition transactions.
|
(b)
|
Represents total consideration net of transaction costs and mortgage debt extinguishments.
|
|
|
Number of Assets Acquired
|
|
Square Footage
|
|
Acquisition Price
|
|
Pro Rata Acquisition Price (a)
|
|
Mortgage Debt
|
|
Pro Rata Mortgage
Debt (a)
|
||||||||||
2014 Acquisitions (b)
|
|
9
|
|
|
1,256,400
|
|
|
$
|
327,241
|
|
|
$
|
268,741
|
|
|
$
|
141,698
|
|
|
$
|
113,358
|
|
2013 Acquisitions
|
|
7
|
|
|
1,088,100
|
|
|
$
|
317,213
|
|
|
$
|
292,256
|
|
|
$
|
67,864
|
|
|
$
|
54,291
|
|
(a)
|
Includes amounts associated with the 2014 acquisition of our partner’s 80% ownership interest in our MS Inland unconsolidated joint venture and the 2013 acquisition of our partner’s 80% ownership interest in five properties owned by our former RioCan unconsolidated joint venture, as well as acquisitions from unaffiliated third parties.
|
(b)
|
Includes the acquisition of the fee interest in Bed Bath & Beyond Plaza, our existing consolidated multi-tenant retail operating property located in Miami, Florida that was previously subject to a ground lease with a third party, and the acquisition of a single-user outparcel at Southlake Town Square, our existing consolidated multi-tenant retail operating property located in Southlake, Texas. The total number of properties in our portfolio was not affected by these two transactions.
|
•
|
drew $110,000 on our unsecured revolving line of credit and used a portion of the proceeds to repay mortgages payable with an aggregate principal balance of $76,847 and a weighted average interest rate of 5.85%. We incurred prepayment fees totaling $4,686 related to the payoff of certain of these mortgages. The remaining proceeds were used for general corporate purposes; and
|
•
|
closed on the sale of Battle Ridge Pavilion, a 103,500 square foot multi-tenant retail property located in Marietta, Georgia for a sales price of $14,100 and an anticipated gain on sale of approximately $1,342.
|
|
|
Notional Amount
|
|
Termination Date
|
|
Fair Value of Derivative Liability at
June 30, 2014
|
||||
Fixed rate portion of credit facility
|
|
$
|
300,000
|
|
|
February 24, 2016
|
|
$
|
721
|
|
Heritage Towne Crossing
|
|
8,230
|
|
|
September 30, 2016
|
|
171
|
|
||
|
|
$
|
308,230
|
|
|
|
|
$
|
892
|
|
(a)
|
Not applicable.
|
(b)
|
Not applicable.
|
(c)
|
Issuer Purchases of Equity Securities
|
Period
|
|
Total number of shares of Class A common stock purchased
|
|
Average price paid per share of Class A common stock
|
|
Total number of shares purchased as part of publicly announced plans or programs
|
|
Maximum number
(or approximate dollar value) of shares that may yet be purchased under the plans or programs
|
|||
April 1, 2014 to April 30, 2014
|
|
2,067
|
|
|
$
|
13.86
|
|
|
N/A
|
|
N/A
|
May 1, 2014 to May 31, 2014
|
|
2,526
|
|
|
$
|
14.76
|
|
|
N/A
|
|
N/A
|
June 1, 2014 to June 30, 2014
|
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
N/A
|
Total
|
|
4,593
|
|
|
$
|
14.35
|
|
|
N/A
|
|
N/A
|
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
Note Purchase Agreement dated as of May 16, 2014 among the Registrant as Issuer and Certain Institutions as Purchasers (Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 22, 2014).
|
10.2
|
|
Retail Properties of America, Inc. 2014 Long-Term Equity Compensation Plan (Incorporated herein by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 31, 2014).
|
10.3
|
|
Indemnification Agreement, dated May 22, 2014, by and between the Registrant and Peter L. Lynch (filed herewith).
|
31.1
|
|
Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
|
31.2
|
|
Certification of Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
|
32.1
|
|
Certification of President and Chief Executive Officer and Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 (furnished herewith).
|
101
|
|
Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013, (ii) Condensed Consolidated Statements of Operations and Other Comprehensive Income for the Three-Month Periods and Six-Month Periods Ended June 30, 2014 and 2013, (iii) Condensed Consolidated Statements of Equity for the Six-Month Periods Ended June 30, 2014 and 2013, (iv) Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2014 and 2013, and (v) Notes to Condensed Consolidated Financial Statements.
|
By:
|
/s/ STEVEN P. GRIMES
|
|
|
|
|
|
Steven P. Grimes
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Date:
|
August 5, 2014
|
|
|
|
|
By:
|
/s/ ANGELA M. AMAN
|
|
|
|
|
|
Angela M. Aman
|
|
|
Executive Vice President,
|
|
|
Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
|
|
|
Date:
|
August 5, 2014
|
|
|
|
|
By:
|
/s/ JULIE M. SWINEHART
|
|
|
|
|
|
Julie M. Swinehart
|
|
|
Senior Vice President and Corporate Controller (Principal Accounting Officer)
|
|
|
|
|
Date:
|
August 5, 2014
|
|
ATTEST:
|
|
COMPANY
|
|
|
|
|
|
|
|
RETAIL PROPERTIES OF AMERICA, INC., a
|
|
|
|
Maryland Corporation
|
|
|
|
|
|
/s/ DENNIS K. HOLLAND
|
|
By:
|
/s/ STEVEN P. GRIMES
|
Dennis K. Holland
|
|
|
Steven P. Grimes
|
Secretary
|
|
|
President and Chief Executive Officer
|
|
|
INDEMNITEE
|
|
|
|
|
|
|
|
/s/ PETER L. LYNCH
|
|
|
|
Peter L. Lynch
|
|
|
|
|
|
|
|
Address:
|
Retail Properties of America, Inc.
|
|
|
|
2021 Spring Road, Suite 200
|
|
|
|
Oak Brook, Illinois 60523
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Retail Properties of America, Inc.;
|
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(s) 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(s) 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/ STEVEN P. GRIMES
|
|
|
|
Steven P. Grimes
|
|
President and Chief Executive Officer
|
|
|
Date:
|
August 5, 2014
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Retail Properties of America, Inc.;
|
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(s) 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(s) 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/ ANGELA M. AMAN
|
|
|
|
Angela M. Aman
|
|
Executive Vice President,
|
|
Chief Financial Officer and Treasurer
|
|
|
Date:
|
August 5, 2014
|
(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.
|
By:
|
/s/ STEVEN P. GRIMES
|
|
|
|
Steven P. Grimes
|
|
President and Chief Executive Officer
|
|
|
Date:
|
August 5, 2014
|
|
|
By:
|
/s/ ANGELA M. AMAN
|
|
|
|
Angela M. Aman
|
|
Executive Vice President,
|
|
Chief Financial Officer and Treasurer
|
|
|
Date:
|
August 5, 2014
|