ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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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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02-0681276
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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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1521 WESTBRANCH DRIVE, SUITE 100
MCLEAN, VIRGINIA
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22102
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(Address of principal executive offices)
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(Zip Code)
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PAGE
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September 30, 2018
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December 31, 2017
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ASSETS
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Real estate, at cost
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$
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913,477
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$
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893,853
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Less: accumulated depreciation
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170,824
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149,417
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Total real estate, net
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742,653
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744,436
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Lease intangibles, net
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109,343
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118,927
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Real estate and related assets held for sale, net
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1,436
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9,046
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Cash and cash equivalents
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2,470
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6,683
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Restricted cash
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2,605
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2,397
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Funds held in escrow
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5,934
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9,369
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Deferred rent receivable, net
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34,613
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33,333
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Other assets
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5,121
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4,263
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TOTAL ASSETS
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$
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904,175
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$
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928,454
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LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
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||||
LIABILITIES
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Mortgage notes payable, net (1)
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$
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437,146
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$
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447,380
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Borrowings under Revolver, net
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30,334
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20,715
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Borrowings under Term Loan, net
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74,604
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74,532
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Deferred rent liability, net
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15,350
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16,250
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Asset retirement obligation
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2,844
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3,051
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Accounts payable and accrued expenses
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2,697
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7,339
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Liabilities related to assets held for sale, net
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297
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114
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Due to Adviser and Administrator (1)
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2,489
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2,289
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Other liabilities
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5,692
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6,554
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TOTAL LIABILITIES
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$
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571,453
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$
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578,224
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Commitments and contingencies (2)
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MEZZANINE EQUITY
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Series D redeemable preferred stock, net, par value $0.001 per share; $25 per share liquidation preference; 6,000,000 shares authorized; and 3,509,555 and 3,421,853 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively (3)
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$
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85,598
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$
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83,432
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TOTAL MEZZANINE EQUITY
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$
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85,598
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$
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83,432
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STOCKHOLDERS’ EQUITY
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Series A and B redeemable preferred stock, par value $0.001 per share; $25 per share liquidation preference; 5,350,000 shares authorized and 2,264,000 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively (3)
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$
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2
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$
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2
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Senior common stock, par value $0.001 per share; 950,000 and 4,450,000 shares authorized; and 883,005 and 904,819 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively (3)
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1
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1
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Common stock, par value $0.001 per share, 87,700,000 and 34,200,000 shares authorized and 28,926,468 and 28,384,016 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively (3)
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29
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28
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Additional paid in capital
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544,895
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534,790
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Accumulated other comprehensive income
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1,063
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35
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Distributions in excess of accumulated earnings
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(298,866
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)
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(268,058
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)
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TOTAL STOCKHOLDERS' EQUITY
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247,124
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266,798
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TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
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$
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904,175
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$
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928,454
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(1)
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Refer to Note 2 “Related-Party Transactions”
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(2)
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Refer to Note 7 “Commitments and Contingencies”
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(3)
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Refer to Note 8 “Stockholders’ and Mezzanine Equity”
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For the three months ended September 30,
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For the nine months ended September 30,
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||||||||||||
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2018
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2017
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2018
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2017
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Operating revenues
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Rental revenue
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$
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25,737
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$
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23,815
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$
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77,021
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$
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68,253
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Tenant recovery revenue
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854
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550
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2,517
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1,294
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Total operating revenues
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26,591
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24,365
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79,538
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69,547
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Operating expenses
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Depreciation and amortization
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11,807
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10,829
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35,166
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30,673
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Property operating expenses
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2,638
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2,178
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8,247
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5,062
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Base management fee (1)
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1,242
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1,277
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3,798
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3,665
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Incentive fee (1)
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785
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640
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2,215
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1,760
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Administration fee (1)
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440
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293
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1,187
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993
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General and administrative
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510
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650
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1,754
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1,776
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Impairment charge
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—
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—
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—
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3,999
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Total operating expenses
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17,422
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15,867
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52,367
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47,928
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Other (expense) income
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Interest expense
|
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(6,531
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)
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(6,119
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)
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(19,275
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)
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(18,223
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)
|
||||
Gain on sale of real estate, net
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—
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1
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1,844
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|
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3,993
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|
||||
Other income
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39
|
|
|
3
|
|
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67
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|
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14
|
|
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Total other expense, net
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(6,492
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)
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(6,115
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)
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(17,364
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)
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(14,216
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)
|
||||
Net income
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2,677
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|
|
2,383
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|
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9,807
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|
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7,403
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|
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Distributions attributable to Series A, B and D preferred stock
|
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(2,612
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)
|
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(2,520
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)
|
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(7,803
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)
|
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(7,330
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)
|
||||
Distributions attributable to senior common stock
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(235
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)
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(247
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)
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(700
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)
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(744
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)
|
||||
Net (loss) income (attributable) available to common stockholders
|
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$
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(170
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)
|
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$
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(384
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)
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$
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1,304
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$
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(671
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)
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(Loss) earnings per weighted average share of common stock - basic & diluted
|
|
|
|
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(Loss) earnings (attributable) available to common shareholders
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$
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(0.01
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)
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$
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(0.01
|
)
|
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$
|
0.05
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|
|
$
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(0.03
|
)
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Weighted average shares of common stock outstanding
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted
|
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28,734,380
|
|
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27,234,569
|
|
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28,532,224
|
|
|
25,833,423
|
|
||||
Distributions declared per common share
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|
$
|
0.375
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|
|
$
|
0.375
|
|
|
$
|
1.125
|
|
|
$
|
1.125
|
|
Earnings per weighted average share of senior common stock
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
$
|
0.79
|
|
|
$
|
0.79
|
|
Weighted average shares of senior common stock outstanding - basic
|
|
886,346
|
|
|
932,636
|
|
|
890,966
|
|
|
947,238
|
|
||||
Comprehensive income
|
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gain (loss) related to interest rate hedging instruments, net
|
|
$
|
245
|
|
|
$
|
(7
|
)
|
|
$
|
1,028
|
|
|
$
|
172
|
|
Other Comprehensive income
|
|
245
|
|
|
(7
|
)
|
|
1,028
|
|
|
172
|
|
||||
Net income
|
|
2,677
|
|
|
2,383
|
|
|
9,807
|
|
|
7,403
|
|
||||
Comprehensive income
|
|
$
|
2,922
|
|
|
$
|
2,376
|
|
|
$
|
10,835
|
|
|
$
|
7,575
|
|
(1)
|
Refer to Note 2 “Related-Party Transactions”
|
|
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For the nine months ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
9,807
|
|
|
$
|
7,403
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
35,166
|
|
|
30,673
|
|
||
Impairment charge
|
|
—
|
|
|
3,999
|
|
||
Gain on sale of real estate, net
|
|
(1,844
|
)
|
|
(3,993
|
)
|
||
Amortization of deferred financing costs
|
|
1,103
|
|
|
1,248
|
|
||
Amortization of deferred rent asset and liability, net
|
|
(797
|
)
|
|
(633
|
)
|
||
Amortization of discount and premium on assumed debt
|
|
(36
|
)
|
|
(80
|
)
|
||
Asset retirement obligation expense
|
|
90
|
|
|
96
|
|
||
Operating changes in assets and liabilities
|
|
|
|
|
||||
Decrease (increase) in other assets
|
|
170
|
|
|
(1,560
|
)
|
||
Increase in deferred rent receivable
|
|
(1,908
|
)
|
|
(2,437
|
)
|
||
Increase (decrease) in accounts payable, accrued expenses, and amount due Adviser and Administrator
|
|
513
|
|
|
(239
|
)
|
||
(Decrease) increase in other liabilities
|
|
(1,071
|
)
|
|
634
|
|
||
Tenant inducement payments
|
|
—
|
|
|
(122
|
)
|
||
Leasing commissions paid
|
|
(402
|
)
|
|
(192
|
)
|
||
Net cash provided by operating activities
|
|
$
|
40,791
|
|
|
$
|
34,797
|
|
Cash flows from investing activities:
|
|
|
|
|
||||
Acquisition of real estate and related intangible assets
|
|
$
|
(22,800
|
)
|
|
$
|
(83,242
|
)
|
Improvements of existing real estate
|
|
(2,494
|
)
|
|
(8,233
|
)
|
||
Proceeds from sale of real estate
|
|
10,773
|
|
|
29,499
|
|
||
Receipts from lenders for funds held in escrow
|
|
1,286
|
|
|
3,712
|
|
||
Payments to lenders for funds held in escrow
|
|
(1,817
|
)
|
|
(5,252
|
)
|
||
Receipts from tenants for reserves
|
|
2,119
|
|
|
1,450
|
|
||
Payments to tenants from reserves
|
|
(1,884
|
)
|
|
(783
|
)
|
||
Deposits on future acquisitions
|
|
(590
|
)
|
|
(1,650
|
)
|
||
Deposits applied against acquisition of real estate investments
|
|
590
|
|
|
1,650
|
|
||
Net cash used in investing activities
|
|
$
|
(14,817
|
)
|
|
$
|
(62,849
|
)
|
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from issuance of equity
|
|
$
|
12,504
|
|
|
$
|
69,891
|
|
Offering costs paid
|
|
(200
|
)
|
|
(1,922
|
)
|
||
Retirement of senior common stock
|
|
(34
|
)
|
|
(24
|
)
|
||
Borrowings under mortgage notes payable
|
|
14,125
|
|
|
51,208
|
|
||
Payments for deferred financing costs
|
|
(345
|
)
|
|
(992
|
)
|
||
Principal repayments on mortgage notes payable
|
|
(24,888
|
)
|
|
(57,182
|
)
|
||
Borrowings from revolving credit facility
|
|
57,400
|
|
|
89,800
|
|
||
Repayments on revolving credit facility
|
|
(47,900
|
)
|
|
(85,300
|
)
|
||
Decrease in security deposits
|
|
(26
|
)
|
|
(165
|
)
|
||
Distributions paid for common, senior common and preferred stock
|
|
(40,615
|
)
|
|
(37,130
|
)
|
||
Net cash (used in) provided by financing activities
|
|
$
|
(29,979
|
)
|
|
$
|
28,184
|
|
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
|
$
|
(4,005
|
)
|
|
$
|
132
|
|
Cash, cash equivalents, and restricted cash at beginning of period
|
|
$
|
9,080
|
|
|
$
|
7,688
|
|
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
5,075
|
|
|
$
|
7,820
|
|
NON-CASH INVESTING AND FINANCING INFORMATION
|
|
|
|
|
||||
Tenant funded fixed asset improvements
|
|
$
|
314
|
|
|
$
|
2,201
|
|
Assumed mortgage in connection with acquisition
|
|
$
|
—
|
|
|
$
|
11,179
|
|
Assumed interest rate swap fair market value
|
|
$
|
—
|
|
|
$
|
42
|
|
Reserves released by title company to tenant
|
|
$
|
3,966
|
|
|
$
|
—
|
|
Unrealized gain related to interest rate hedging instruments, net
|
|
$
|
1,028
|
|
|
$
|
172
|
|
Capital improvements included in accounts payable and accrued expenses
|
|
$
|
506
|
|
|
$
|
2,053
|
|
|
|
For the nine months ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
|
$
|
2,470
|
|
|
$
|
4,287
|
|
Restricted cash
|
|
2,605
|
|
|
3,533
|
|
||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statement of cash flows
|
|
$
|
5,075
|
|
|
$
|
7,820
|
|
|
|
For the three months ended September 30,
|
|
For the nine months ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Calculation of basic (loss) earnings per share of common stock:
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income (attributable) available to common stockholders
|
|
$
|
(170
|
)
|
|
$
|
(384
|
)
|
|
$
|
1,304
|
|
|
$
|
(671
|
)
|
Denominator for basic weighted average shares of common stock
|
|
28,734,380
|
|
|
27,234,569
|
|
|
28,532,224
|
|
|
25,833,423
|
|
||||
Basic (loss) earnings per share of common stock
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
Calculation of diluted (loss) earnings per share of common stock:
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income (attributable) available to common stockholders
|
|
$
|
(170
|
)
|
|
$
|
(384
|
)
|
|
$
|
1,304
|
|
|
$
|
(671
|
)
|
Add: income impact of assumed conversion of senior common stock (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income (attributable) available to common stockholders plus assumed conversions (1)
|
|
$
|
(170
|
)
|
|
$
|
(384
|
)
|
|
$
|
1,304
|
|
|
$
|
(671
|
)
|
Denominator for basic weighted average shares of common stock
|
|
28,734,380
|
|
|
27,234,569
|
|
|
28,532,224
|
|
|
25,833,423
|
|
||||
Effect of convertible Senior Common Stock (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Denominator for diluted weighted average shares of common stock (1)
|
|
28,734,380
|
|
|
27,234,569
|
|
|
28,532,224
|
|
|
25,833,423
|
|
||||
Diluted (loss) earnings per share of common stock
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
(1)
|
We excluded shares of Senior Common Stock that are convertible into
737,752
and
773,553
shares of our common stock from the calculation of diluted (loss) earnings per share for the
three and nine months ended
September 30, 2018
and
2017
, respectively, because it was anti-dilutive.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Real estate:
|
|
|
|
|
||||
Land
|
|
$
|
122,890
|
|
|
$
|
121,783
|
|
Building and improvements
|
|
726,690
|
|
|
708,948
|
|
||
Tenant improvements
|
|
63,897
|
|
|
63,122
|
|
||
Accumulated depreciation
|
|
(170,824
|
)
|
|
(149,417
|
)
|
||
Real estate, net
|
|
$
|
742,653
|
|
|
$
|
744,436
|
|
Nine Months Ended
|
|
Square Footage
|
|
Lease Term
|
|
Purchase Price
|
|
Acquisition Expenses
|
|
Annualized GAAP Rent
|
|
Debt Issued or Assumed
|
|
|||||||||
September 30, 2018
|
(1)
|
285,254
|
|
|
11.7 Years
|
|
$
|
22,800
|
|
|
$
|
225
|
|
(3)
|
$
|
1,851
|
|
|
$
|
4,745
|
|
(4)
|
September 30, 2017
|
(2)
|
666,451
|
|
|
10.7 Years
|
|
94,421
|
|
|
1,171
|
|
(3)
|
10,776
|
|
|
54,887
|
|
(5)
|
(1)
|
On
March 9, 2018
, we acquired a
127,444
square foot property in Vance, Alabama for
$14.3 million
. The annualized GAAP rent on the
9.8
year lease is
$1.1 million
. On
September 20, 2018
, we acquired a
157,810
square foot property in Columbus, Ohio for
$8.5 million
. We issued
$4.7 million
of mortgage debt in connection with this acquisition. The annualized GAAP rent on the
15.0
year lease is
$0.8 million
.
|
(2)
|
On
June 22, 2017
, we acquired a
60,016
square foot property in Conshohocken, Pennsylvania for
$15.7 million
. We assumed
$11.2 million
of mortgage debt. The annualized GAAP rent on the
8.5
year lease is
$1.7 million
. On
July 7, 2017
, we acquired a
300,000
square foot property in Philadelphia, Pennsylvania for
$27.1 million
. We issued
$14.9 million
of mortgage debt with a fixed interest rate of
3.75%
in connection with this acquisition. The annualized GAAP rent on the
15.4
year lease is
$2.3 million
. On
July 31, 2017
, we acquired a
306,435
square foot, three property portfolio, located in Maitland, Florida for
$51.6 million
. We issued
$28.8 million
of mortgage debt with a fixed interest rate of
3.89%
in connection with this acquisition. The portfolio has a weighted average lease term of
8.6 years
and annualized GAAP rent of
$6.8 million
.
|
(3)
|
We accounted for these transactions under ASU 2017-01, “Clarifying the Definition of a Business.” As a result, we treated our acquisitions during the
nine months ended September 30, 2018
and
2017
as asset acquisitions rather than business combinations. As a result of this treatment, we capitalized
$0.2 million
and
$1.2 million
, respectively, of acquisition costs that would otherwise have been expensed under business combination treatment.
|
(4)
|
We entered into an interest rate swap in connection with
$4.7 million
of issued debt on our Columbus, Ohio acquisition, pursuant to which we will pay our counterparty a fixed interest rate of
3.22%
, and receive a variable interest rate of one month LIBOR from our counterparty. Our total interest rate on this debt is fixed at
5.32%
. We have elected to treat this interest rate swap as a cash flow hedge, and all changes in fair market value will be recorded to accumulated other comprehensive income on the consolidated balance sheets.
|
(5)
|
We assumed an interest rate swap in connection with
$11.2 million
of assumed debt on our Conshohocken, Pennsylvania acquisition, pursuant to which we will pay our counterparty a fixed interest rate of
1.80%
, and receive a variable interest rate of one month LIBOR from our counterparty. Our total interest rate on this debt is fixed at
3.55%
. The interest rate swap had a fair value of
$0.04 million
upon the date of assumption, and subsequently increased in value to
$0.7 million
at
September 30, 2018
. We have elected to treat this interest rate swap as a cash flow hedge, and all changes in fair market value will be recorded to accumulated other comprehensive income on the consolidated balance sheets.
|
|
|
Nine months ended September 30, 2018
|
|
Nine months ended September 30, 2017
|
||||
Acquired assets and liabilities
|
|
Purchase price
|
|
Purchase price
|
||||
Land
|
|
$
|
1,140
|
|
|
$
|
15,137
|
|
Building
|
|
17,849
|
|
|
51,186
|
|
||
Tenant Improvements
|
|
776
|
|
|
6,060
|
|
||
In-place Leases
|
|
1,249
|
|
|
9,516
|
|
||
Leasing Costs
|
|
1,245
|
|
|
5,083
|
|
||
Customer Relationships
|
|
792
|
|
|
6,851
|
|
||
Above Market Leases
|
|
49
|
|
|
1,916
|
|
||
Below Market Leases
|
|
(300
|
)
|
|
(1,769
|
)
|
||
Discount on Assumed Debt
|
|
—
|
|
|
399
|
|
||
Fair Value of Interest Rate Swap Assumed
|
|
—
|
|
|
42
|
|
||
Total Purchase Price
|
|
$
|
22,800
|
|
|
$
|
94,421
|
|
Nine Months Ended
|
|
Aggregate Square Footage
|
|
Weighted Average Lease Term
|
|
Aggregate Annualized GAAP Rent
|
|
Aggregate Tenant Improvement
|
|
Aggregate Leasing Commissions
|
|||||||
September 30, 2018
|
(1)
|
184,441
|
|
|
1.6 years
|
|
$
|
391
|
|
|
$
|
—
|
|
|
$
|
14
|
|
September 30, 2017
|
|
577,471
|
|
|
8.9 years
|
|
4,062
|
|
|
1,181
|
|
|
475
|
|
(1)
|
One of the new leases we entered into is on our South Hadley, Massachusetts property which is classified as held for sale on the condensed consolidated balance sheets as of
September 30, 2018
.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Lease Intangibles
|
|
Accumulated Amortization
|
|
Lease Intangibles
|
|
Accumulated Amortization
|
||||||||
In-place leases
|
|
$
|
81,377
|
|
|
$
|
(38,767
|
)
|
|
$
|
80,355
|
|
|
$
|
(33,201
|
)
|
Leasing costs
|
|
56,878
|
|
|
(26,738
|
)
|
|
55,695
|
|
|
(23,016
|
)
|
||||
Customer relationships
|
|
59,502
|
|
|
(22,909
|
)
|
|
58,892
|
|
|
(19,798
|
)
|
||||
|
|
$
|
197,757
|
|
|
$
|
(88,414
|
)
|
|
$
|
194,942
|
|
|
$
|
(76,015
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Deferred Rent Receivable/(Liability)
|
|
Accumulated (Amortization)/Accretion
|
|
Deferred Rent Receivable/(Liability)
|
|
Accumulated (Amortization)/Accretion
|
||||||||
Above market leases
|
|
$
|
14,511
|
|
|
$
|
(8,679
|
)
|
|
$
|
14,425
|
|
|
$
|
(7,962
|
)
|
Below market leases and deferred revenue
|
|
(27,338
|
)
|
|
11,988
|
|
|
(26,725
|
)
|
|
10,475
|
|
||||
|
|
$
|
(12,827
|
)
|
|
$
|
3,309
|
|
|
$
|
(12,300
|
)
|
|
$
|
2,513
|
|
Intangible Assets & Liabilities
|
|
2018
|
|
2017
|
In-place leases
|
|
13.0
|
|
9.7
|
Leasing costs
|
|
13.0
|
|
9.7
|
Customer relationships
|
|
21.2
|
|
12.7
|
Above market leases
|
|
9.8
|
|
10.2
|
Below market leases
|
|
15.0
|
|
9.4
|
All intangible assets & liabilities
|
|
15.0
|
|
10.4
|
Aggregate Square Footage Sold
|
|
Aggregate Sales Price
|
|
Aggregate Sales Costs
|
|
Aggregate Gain on Sale of Real Estate, net
|
|||||||
166,200
|
|
|
$
|
11,100
|
|
|
$
|
327
|
|
|
$
|
1,844
|
|
|
|
For the three months ended September 30,
|
|
For the nine months ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Operating revenue
|
|
$
|
—
|
|
|
$
|
173
|
|
|
$
|
93
|
|
|
$
|
698
|
|
Operating expense
|
|
—
|
|
|
212
|
|
|
161
|
|
|
528
|
|
||||
Other income, net
|
|
—
|
|
|
—
|
|
|
1,844
|
|
(1)
|
—
|
|
||||
(Expense) income from real estate and related assets sold
|
|
$
|
—
|
|
|
$
|
(39
|
)
|
|
$
|
1,776
|
|
|
$
|
170
|
|
(1)
|
Includes a
$1.8 million
gain on sale of real estate, net on
two
properties.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets Held for Sale
|
|
|
|
||||
Real estate, at cost
|
$
|
2,287
|
|
|
$
|
12,997
|
|
Less: accumulated depreciation
|
857
|
|
|
3,970
|
|
||
Total real estate held for sale, net
|
1,430
|
|
|
9,027
|
|
||
Lease intangibles, net
|
6
|
|
|
9
|
|
||
Deferred rent receivable, net
|
—
|
|
|
10
|
|
||
Total Assets Held for Sale
|
$
|
1,436
|
|
|
$
|
9,046
|
|
Liabilities Held for Sale
|
|
|
|
||||
Asset retirement obligation
|
$
|
297
|
|
|
$
|
114
|
|
Total Liabilities Held for Sale
|
$
|
297
|
|
|
$
|
114
|
|
|
|
Encumbered properties at
|
|
|
|
Carrying Value at
|
|
Stated Interest Rates at
|
|
Scheduled Maturity Dates at
|
|||||||
|
|
September 30, 2018
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|
September 30, 2018
|
|
September 30, 2018
|
|||||
Mortgage and other secured loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fixed rate mortgage loans
|
|
49
|
|
|
|
|
$
|
380,620
|
|
|
$
|
383,189
|
|
|
(1)
|
|
(2)
|
Variable rate mortgage loans
|
|
18
|
|
|
|
|
61,115
|
|
|
69,302
|
|
|
(3)
|
|
(2)
|
||
Premiums and discounts, net
|
|
-
|
|
|
|
|
(318
|
)
|
|
(281
|
)
|
|
N/A
|
|
N/A
|
||
Deferred financing costs, mortgage loans, net
|
|
-
|
|
|
|
|
(4,271
|
)
|
|
(4,830
|
)
|
|
N/A
|
|
N/A
|
||
Total mortgage notes payable, net
|
|
67
|
|
|
|
|
$
|
437,146
|
|
|
$
|
447,380
|
|
|
(4)
|
|
|
Variable rate revolving credit facility
|
|
32
|
|
|
(6)
|
|
$
|
30,900
|
|
|
$
|
21,400
|
|
|
LIBOR + 1.75%
|
|
10/27/2021
|
Deferred financing costs, revolving credit facility
|
|
-
|
|
|
|
|
(566
|
)
|
|
(685
|
)
|
|
N/A
|
|
N/A
|
||
Total revolver, net
|
|
32
|
|
|
|
|
$
|
30,334
|
|
|
$
|
20,715
|
|
|
|
|
|
Variable rate term loan facility
|
|
-
|
|
|
(6)
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
LIBOR + 1.70%
|
|
10/27/2022
|
Deferred financing costs, term loan facility
|
|
-
|
|
|
|
|
(396
|
)
|
|
(468
|
)
|
|
N/A
|
|
N/A
|
||
Total term loan, net
|
|
N/A
|
|
|
|
|
$
|
74,604
|
|
|
$
|
74,532
|
|
|
|
|
|
Total mortgage notes payable and credit facility
|
|
99
|
|
|
|
|
$
|
542,084
|
|
|
$
|
542,627
|
|
|
(5)
|
|
|
(1)
|
Interest rates on our fixed rate mortgage notes payable vary from
3.55%
to
6.63%
.
|
(2)
|
We have
46
mortgage notes payable with maturity dates ranging from
12/1/2018
through
7/1/2045
.
|
(3)
|
Interest rates on our variable rate mortgage notes payable vary from one month LIBOR +
2.25%
to one month LIBOR +
2.75%
. At
September 30, 2018
, one month LIBOR was approximately
2.26%
.
|
(4)
|
The weighted average interest rate on the mortgage notes outstanding at
September 30, 2018
was approximately
4.66%
.
|
(5)
|
The weighted average interest rate on all debt outstanding at
September 30, 2018
was approximately
4.52%
.
|
(6)
|
The amount we may draw under our senior unsecured revolving credit facility and term loan facility is based on a percentage of the fair value of a combined pool of
32
unencumbered properties as of
September 30, 2018
.
|
Variable Rate Debt Repaid
|
|
Interest Rate on Variable Rate Debt Repaid
|
|
Fixed Rate Debt Repaid
|
|
Interest Rate on Fixed Rate Debt Repaid
|
||||||
$
|
6,738
|
|
|
LIBOR +
|
2.25%
|
|
$
|
9,444
|
|
|
5.75
|
%
|
Aggregate Fixed Rate Debt Issued
|
|
Weighted Average Interest Rate on Fixed Rate Debt
|
|
||
$
|
14,125
|
|
(1)
|
4.83%
|
(2)
|
(1)
|
We issued
$14.1 million
of swapped to fixed rate debt in connection with
two
properties with maturity dates of
March 1, 2023
and
November 1, 2028
.
|
(2)
|
We entered into
two
interest rate swaps and will be paying an all in fixed rates of
4.58%
and
5.32%
, respectively.
|
Year
|
|
Scheduled Principal Payments
|
|
||
Three Months Ending December 31, 2018
|
|
$
|
10,255
|
|
|
2019
|
|
52,262
|
|
|
|
2020
|
|
32,006
|
|
|
|
2021
|
|
36,917
|
|
|
|
2022
|
|
97,444
|
|
|
|
2023
|
|
69,342
|
|
|
|
Thereafter
|
|
143,509
|
|
|
|
Total
|
|
$
|
441,735
|
|
(1)
|
(1)
|
This figure does not include
$0.3 million
of premiums and discounts, net, and
$4.3 million
of deferred financing costs, which are reflected in mortgage notes payable, net on the condensed consolidated balance sheets.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||
Aggregate Cost
|
|
Aggregate Notional Amount
|
|
Aggregate Fair Value
|
|
Aggregate Notional Amount
|
|
Aggregate Fair Value
|
||||||||||
$
|
1,111
|
|
(1)
|
$
|
135,185
|
|
|
$
|
1,245
|
|
|
$
|
143,512
|
|
|
$
|
504
|
|
(1)
|
We have entered into various interest rate cap agreements on variable rate debt with LIBOR caps ranging from
2.25%
to
3.25%
.
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
Aggregate Notional Amount
|
|
Aggregate Fair Value
|
|
Aggregate Notional Amount
|
|
Aggregate Fair Value
|
||||||||
$
|
24,867
|
|
|
$
|
768
|
|
|
$
|
11,036
|
|
|
$
|
316
|
|
|
|
Amount of Gain (Loss), net recognized in Comprehensive Income
|
||||||||||||||
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Derivatives in cash flow hedging relationships
|
|
|
|
|
|
|
|
|
||||||||
Interest rate caps
|
|
$
|
107
|
|
|
$
|
—
|
|
|
$
|
576
|
|
|
$
|
—
|
|
Interest rate swaps
|
|
138
|
|
|
(7
|
)
|
|
452
|
|
|
172
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
$
|
245
|
|
|
$
|
(7
|
)
|
|
$
|
1,028
|
|
|
$
|
172
|
|
|
|
|
|
Asset Derivatives Fair Value at
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
||
Interest rate caps
|
|
Other assets
|
|
$
|
1,036
|
|
|
$
|
450
|
|
Interest rate swaps
|
|
Other assets
|
|
768
|
|
|
316
|
|
||
|
|
|
|
|
|
|
||||
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
||||
Interest rate caps
|
|
Other assets
|
|
$
|
209
|
|
|
$
|
54
|
|
|
|
|
|
|
|
|
||||
Total derivatives
|
|
|
|
$
|
2,013
|
|
|
$
|
820
|
|
Year
|
|
Minimum Rental Payments Due
|
||
Three Months Ending December 31, 2018
|
|
$
|
117
|
|
2019
|
|
465
|
|
|
2020
|
|
466
|
|
|
2021
|
|
392
|
|
|
2022
|
|
319
|
|
|
2023
|
|
322
|
|
|
Thereafter
|
|
3,914
|
|
|
Total
|
|
$
|
5,995
|
|
|
|
Series A and B Preferred Stock
|
|
Common Stock
|
|
Senior Common Stock
|
|
Series A and B Preferred Stock
|
|
Senior Common Stock
|
|
Common Stock
|
|
Additional Paid in Capital
|
|
Accumulated Other Comprehensive Income
|
|
Distributions in Excess of Accumulated Earnings
|
|
Total Stockholders' Equity
|
|||||||||||||||||
Balance at December 31, 2017
|
|
2,264,000
|
|
|
28,384,016
|
|
|
904,819
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
28
|
|
|
$
|
534,790
|
|
|
$
|
35
|
|
|
$
|
(268,058
|
)
|
|
$
|
266,798
|
|
Issuance of Series A and B preferred stock and common stock, net
|
|
—
|
|
|
526,323
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
10,139
|
|
|
—
|
|
|
—
|
|
|
10,140
|
|
|||||||
Conversion of senior common stock to common stock
|
|
—
|
|
|
16,129
|
|
|
(19,548
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Retirement of senior common stock, net
|
|
—
|
|
|
—
|
|
|
(2,266
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|||||||
Distributions declared to common, senior common and preferred stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,615
|
)
|
|
(40,615
|
)
|
|||||||
Comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,028
|
|
|
—
|
|
|
1,028
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,807
|
|
|
9,807
|
|
|||||||
Balance at September 30, 2018
|
|
2,264,000
|
|
|
28,926,468
|
|
|
883,005
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
29
|
|
|
$
|
544,895
|
|
|
$
|
1,063
|
|
|
$
|
(298,866
|
)
|
|
$
|
247,124
|
|
|
|
For the three months ended September 30,
|
|
For the nine months ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Common Stock
|
|
$
|
0.375
|
|
|
$
|
0.375
|
|
|
$
|
1.125
|
|
|
$
|
1.125
|
|
Senior Common Stock
|
|
0.2625
|
|
|
0.2625
|
|
|
0.7875
|
|
|
0.7875
|
|
||||
Series A Preferred Stock
|
|
0.4843749
|
|
|
0.4843749
|
|
|
1.4531247
|
|
|
1.4531247
|
|
||||
Series B Preferred Stock
|
|
0.46875
|
|
|
0.46875
|
|
|
1.4063
|
|
|
1.4063
|
|
||||
Series D Preferred Stock
|
|
0.4374999
|
|
|
0.4374999
|
|
|
1.3124997
|
|
|
1.3124997
|
|
Record Date
|
|
Payment Date
|
|
Common Stock Distributions per Share
|
|
Series A Preferred Distributions per Share
|
|
Series B Preferred Distributions per Share
|
|
Series D Preferred Distributions per Share
|
||||||||
October 19, 2018
|
|
October 31, 2018
|
|
$
|
0.125
|
|
|
$
|
0.1614583
|
|
|
$
|
0.15625
|
|
|
$
|
0.1458333
|
|
November 20, 2018
|
|
November 30, 2018
|
|
0.125
|
|
|
0.1614583
|
|
|
0.15625
|
|
|
0.1458333
|
|
||||
December 20, 2018
|
|
December 31, 2018
|
|
0.125
|
|
|
0.1614583
|
|
|
0.15625
|
|
|
0.1458333
|
|
||||
|
|
|
|
$
|
0.375
|
|
|
$
|
0.4843749
|
|
|
$
|
0.46875
|
|
|
$
|
0.4374999
|
|
Senior Common Stock Distributions
|
||||||
Payable to the Holders of Record During the Month of:
|
|
Payment Date
|
|
Distribution per Share
|
||
October
|
|
November 7, 2018
|
|
$
|
0.0875
|
|
November
|
|
December 7, 2018
|
|
0.0875
|
|
|
December
|
|
January 7, 2019
|
|
0.0875
|
|
|
|
|
|
|
$
|
0.2625
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
we owned
101
properties totaling
11.8 million
square feet in
24
states;
|
•
|
our occupancy rate was
99.1%
;
|
•
|
the weighted average remaining term of our mortgage debt was
6.2
years and the weighted average interest rate was
4.66%
; and
|
•
|
the average remaining lease term of the portfolio was
7.1 years
.
|
Aggregate Square Footage Sold
|
|
Aggregate Sales Price
|
|
Aggregate Sales Costs
|
|
Aggregate Gain on Sale of Real Estate, net
|
|||||||
166,200
|
|
|
$
|
11,100
|
|
|
$
|
327
|
|
|
$
|
1,844
|
|
Aggregate Square Footage
|
|
Weighted Average Lease Term
|
|
Aggregate Purchase Price
|
|
Acquisition Costs
|
|
Aggregate Annualized GAAP Rent
|
|
Aggregate Debt Issued or Assumed
|
|||||||||
285,254
|
|
|
11.7 years
|
|
$
|
22,800
|
|
|
$
|
225
|
|
(1)
|
$
|
1,851
|
|
|
$
|
4,745
|
|
(1)
|
We accounted for these transactions under ASU 2017-01. As a result, we treated these acquisitions as asset acquisitions rather than business combinations. As a result of this treatment, we capitalized
$0.2 million
of acquisition costs that would otherwise have been expensed under business combination treatment.
|
Nine Months Ended
|
|
Aggregate Square Footage
|
|
Weighted Average Lease Term
|
|
Aggregate Annualized GAAP Rent
|
|
Aggregate Leasing Commissions
|
|||||
September 30, 2018
|
(1)
|
184,441
|
|
|
1.6 years
|
|
$
|
391
|
|
|
$
|
14
|
|
(1)
|
One of the new leases we entered into is on our South Hadley, Massachusetts property which, is classified as held for sale on the condensed consolidated balance sheets as of
September 30, 2018
.
|
Variable Rate Debt Repaid
|
|
Interest Rate on Variable Rate Debt Repaid
|
|
Fixed Rate Debt Repaid
|
|
Interest Rate on Fixed Rate Debt Repaid
|
||||||
$
|
6,738
|
|
|
LIBOR +
|
2.25%
|
|
$
|
9,444
|
|
|
5.75
|
%
|
Aggregate Fixed Rate Debt Issued
|
|
Weighted Average Interest Rate on Fixed Rate Debt
|
|
|||
$
|
14,125
|
|
(1)
|
4.83
|
%
|
(2)
|
(1)
|
We issued
$14.1 million
of swapped to fixed rate debt in connection with
two
properties with maturity dates of
March 1, 2023
and
November 1, 2028
.
|
(2)
|
We entered into an interest rate swaps and will be paying all in fixed rates of
4.58%
and
5.32%
, respectively.
|
|
|
For the three months ended September 30,
|
|
For the nine months ended September 30,
|
||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||
Industry Classification
|
|
Rental Revenue
|
|
Percentage of Rental Revenue
|
|
Rental Revenue
|
|
Percentage of Rental Revenue
|
|
Rental Revenue
|
|
Percentage of Rental Revenue
|
|
Rental Revenue
|
|
Percentage of Rental Revenue
|
||||||||||||
Telecommunications
|
|
$
|
3,957
|
|
|
15.4
|
%
|
|
$
|
3,930
|
|
|
16.5
|
%
|
|
$
|
11,870
|
|
|
15.4
|
%
|
|
$
|
11,649
|
|
|
17.1
|
%
|
Diversified/Conglomerate Services
|
|
3,459
|
|
|
13.4
|
|
|
2,993
|
|
|
12.6
|
|
|
10,377
|
|
|
13.5
|
|
|
7,009
|
|
|
10.3
|
|
||||
Automobile
|
|
3,168
|
|
|
12.3
|
|
|
2,875
|
|
|
12.1
|
|
|
9,249
|
|
|
12.0
|
|
|
8,303
|
|
|
12.2
|
|
||||
Healthcare
|
|
2,985
|
|
|
11.6
|
|
|
3,001
|
|
|
12.6
|
|
|
8,961
|
|
|
11.6
|
|
|
10,127
|
|
|
14.8
|
|
||||
Banking
|
|
1,994
|
|
|
7.7
|
|
|
760
|
|
|
3.2
|
|
|
5,985
|
|
|
7.8
|
|
|
1,986
|
|
|
2.9
|
|
||||
Information Technology
|
|
1,498
|
|
|
5.8
|
|
|
1,498
|
|
|
6.3
|
|
|
4,495
|
|
|
5.8
|
|
|
4,496
|
|
|
6.6
|
|
||||
Personal, Food & Miscellaneous Services
|
|
1,459
|
|
|
5.7
|
|
|
1,423
|
|
|
6.0
|
|
|
4,379
|
|
|
5.7
|
|
|
3,208
|
|
|
4.7
|
|
||||
Diversified/Conglomerate Manufacturing
|
|
1,216
|
|
|
4.7
|
|
|
1,210
|
|
|
5.1
|
|
|
3,650
|
|
|
4.7
|
|
|
3,621
|
|
|
5.3
|
|
||||
Electronics
|
|
1,060
|
|
|
4.1
|
|
|
1,068
|
|
|
4.4
|
|
|
3,180
|
|
|
4.1
|
|
|
3,232
|
|
|
4.7
|
|
||||
Buildings and Real Estate
|
|
1,025
|
|
|
4.0
|
|
|
1,019
|
|
|
4.3
|
|
|
3,058
|
|
|
4.0
|
|
|
2,187
|
|
|
3.2
|
|
||||
Chemicals, Plastics & Rubber
|
|
740
|
|
|
2.9
|
|
|
722
|
|
|
3.0
|
|
|
2,193
|
|
|
2.9
|
|
|
2,215
|
|
|
3.3
|
|
||||
Personal & Non-Durable Consumer Products
|
|
672
|
|
|
2.6
|
|
|
663
|
|
|
2.8
|
|
|
2,016
|
|
|
2.6
|
|
|
1,991
|
|
|
2.9
|
|
||||
Machinery
|
|
560
|
|
|
2.2
|
|
|
560
|
|
|
2.3
|
|
|
1,681
|
|
|
2.2
|
|
|
1,681
|
|
|
2.5
|
|
||||
Childcare
|
|
556
|
|
|
2.2
|
|
|
556
|
|
|
2.3
|
|
|
1,667
|
|
|
2.2
|
|
|
1,667
|
|
|
2.4
|
|
||||
Containers, Packaging & Glass
|
|
454
|
|
|
1.8
|
|
|
430
|
|
|
1.8
|
|
|
1,363
|
|
|
1.8
|
|
|
1,379
|
|
|
2.0
|
|
||||
Beverage, Food & Tobacco
|
|
352
|
|
|
1.4
|
|
|
525
|
|
|
2.2
|
|
|
1,150
|
|
|
1.5
|
|
|
1,577
|
|
|
2.3
|
|
||||
Printing & Publishing
|
|
286
|
|
|
1.1
|
|
|
286
|
|
|
1.2
|
|
|
858
|
|
|
1.1
|
|
|
1,036
|
|
|
1.5
|
|
||||
Education
|
|
164
|
|
|
0.6
|
|
|
164
|
|
|
0.7
|
|
|
492
|
|
|
0.6
|
|
|
492
|
|
|
0.7
|
|
||||
Home & Office Furnishings
|
|
132
|
|
|
0.5
|
|
|
132
|
|
|
0.6
|
|
|
397
|
|
|
0.5
|
|
|
397
|
|
|
0.6
|
|
||||
Total
|
|
$
|
25,737
|
|
|
100.0
|
%
|
|
$
|
23,815
|
|
|
100.0
|
%
|
|
$
|
77,021
|
|
|
100.0
|
%
|
|
$
|
68,253
|
|
|
100.0
|
%
|
State
|
|
Rental Revenue for the three months ended September 30, 2018
|
|
Percentage of Rental Revenue
|
|
Number of Leases for the three months ended September 30, 2018
|
|
Rental Revenue for the three months ended September 30, 2017
|
|
Percentage of Rental Revenue
|
|
Number of Leases for the three months ended September 30, 2017
|
||||||||
Texas
|
|
$
|
3,705
|
|
|
14.4
|
%
|
|
12
|
|
|
$
|
3,822
|
|
|
16.0
|
%
|
|
12
|
|
Pennsylvania
|
|
3,250
|
|
|
12.6
|
|
|
9
|
|
|
3,214
|
|
|
13.5
|
|
|
9
|
|
||
Florida
|
|
2,839
|
|
|
11.0
|
|
|
10
|
|
|
2,264
|
|
|
9.5
|
|
|
10
|
|
||
Ohio
|
|
2,414
|
|
|
9.4
|
|
|
16
|
|
|
1,964
|
|
|
8.3
|
|
|
13
|
|
||
Utah
|
|
1,664
|
|
|
6.5
|
|
|
3
|
|
|
946
|
|
|
4.0
|
|
|
2
|
|
||
North Carolina
|
|
1,538
|
|
|
6.0
|
|
|
8
|
|
|
1,512
|
|
|
6.4
|
|
|
8
|
|
||
Georgia
|
|
1,204
|
|
|
4.7
|
|
|
6
|
|
|
1,192
|
|
|
5.0
|
|
|
6
|
|
||
South Carolina
|
|
1,153
|
|
|
4.5
|
|
|
2
|
|
|
1,153
|
|
|
4.8
|
|
|
2
|
|
||
Michigan
|
|
1,082
|
|
|
4.2
|
|
|
4
|
|
|
1,082
|
|
|
4.5
|
|
|
4
|
|
||
Minnesota
|
|
922
|
|
|
3.6
|
|
|
6
|
|
|
930
|
|
|
3.9
|
|
|
6
|
|
||
All Other States
|
|
5,966
|
|
|
23.1
|
|
|
32
|
|
|
5,736
|
|
|
24.1
|
|
|
33
|
|
||
Total
|
|
$
|
25,737
|
|
|
100.0
|
%
|
|
108
|
|
|
$
|
23,815
|
|
|
100.0
|
%
|
|
105
|
|
State
|
|
Rental Revenue for the nine months ended September 30, 2018
|
|
Percentage of Rental Revenue
|
|
Number of Leases for the nine months ended September 30, 2018
|
|
Rental Revenue for the nine months ended September 30, 2017
|
|
Percentage of Rental Revenue
|
|
Number of Leases for the nine months ended September 30, 2017
|
||||||||
Texas
|
|
$
|
11,194
|
|
|
14.5
|
%
|
|
12
|
|
|
$
|
11,372
|
|
|
16.7
|
%
|
|
12
|
|
Pennsylvania
|
|
9,753
|
|
|
12.7
|
|
|
9
|
|
|
7,721
|
|
|
11.3
|
|
|
9
|
|
||
Florida
|
|
8,515
|
|
|
11.1
|
|
|
10
|
|
|
4,499
|
|
|
6.6
|
|
|
10
|
|
||
Ohio
|
|
7,202
|
|
|
9.4
|
|
|
16
|
|
|
7,016
|
|
|
10.3
|
|
|
13
|
|
||
Utah
|
|
4,993
|
|
|
6.5
|
|
|
3
|
|
|
2,839
|
|
|
4.2
|
|
|
2
|
|
||
North Carolina
|
|
4,571
|
|
|
5.9
|
|
|
8
|
|
|
4,518
|
|
|
6.6
|
|
|
8
|
|
||
Georgia
|
|
3,612
|
|
|
4.7
|
|
|
6
|
|
|
3,577
|
|
|
5.2
|
|
|
6
|
|
||
South Carolina
|
|
3,459
|
|
|
4.5
|
|
|
2
|
|
|
3,459
|
|
|
5.1
|
|
|
2
|
|
||
Michigan
|
|
3,245
|
|
|
4.2
|
|
|
4
|
|
|
3,245
|
|
|
4.8
|
|
|
4
|
|
||
Minnesota
|
|
2,766
|
|
|
3.6
|
|
|
6
|
|
|
2,773
|
|
|
4.1
|
|
|
6
|
|
||
All Other States
|
|
17,711
|
|
|
22.9
|
|
|
32
|
|
|
17,234
|
|
|
25.1
|
|
|
33
|
|
||
|
|
$
|
77,021
|
|
|
100.0
|
%
|
|
108
|
|
|
$
|
68,253
|
|
|
100.0
|
%
|
|
105
|
|
|
|
For the three months ended September 30,
|
|||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|||||||
Rental revenue
|
|
$
|
25,737
|
|
|
$
|
23,815
|
|
|
$
|
1,922
|
|
|
8.1
|
%
|
Tenant recovery revenue
|
|
854
|
|
|
550
|
|
|
304
|
|
|
55.3
|
%
|
|||
Total operating revenues
|
|
26,591
|
|
|
24,365
|
|
|
2,226
|
|
|
9.1
|
%
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization
|
|
11,807
|
|
|
10,829
|
|
|
978
|
|
|
9.0
|
%
|
|||
Property operating expenses
|
|
2,638
|
|
|
2,178
|
|
|
460
|
|
|
21.1
|
%
|
|||
Base management fee
|
|
1,242
|
|
|
1,277
|
|
|
(35
|
)
|
|
(2.7
|
)%
|
|||
Incentive fee
|
|
785
|
|
|
640
|
|
|
145
|
|
|
22.7
|
%
|
|||
Administration fee
|
|
440
|
|
|
293
|
|
|
147
|
|
|
50.2
|
%
|
|||
General and administrative
|
|
510
|
|
|
650
|
|
|
(140
|
)
|
|
(21.5
|
)%
|
|||
Total operating expenses
|
|
17,422
|
|
|
15,867
|
|
|
1,555
|
|
|
9.8
|
%
|
|||
Other (expense) income
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
|
(6,531
|
)
|
|
(6,119
|
)
|
|
(412
|
)
|
|
6.7
|
%
|
|||
Loss on sale of real estate, net
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
(100.0
|
)%
|
|||
Other income
|
|
39
|
|
|
3
|
|
|
36
|
|
|
1,200.0
|
%
|
|||
Total other expense, net
|
|
(6,492
|
)
|
|
(6,115
|
)
|
|
(377
|
)
|
|
6.2
|
%
|
|||
Net income
|
|
2,677
|
|
|
2,383
|
|
|
294
|
|
|
12.3
|
%
|
|||
Distributions attributable to Series A, B and D preferred stock
|
|
(2,612
|
)
|
|
(2,520
|
)
|
|
(92
|
)
|
|
3.7
|
%
|
|||
Distributions attributable to senior common stock
|
|
(235
|
)
|
|
(247
|
)
|
|
12
|
|
|
(4.9
|
)%
|
|||
Net loss attributable to common stockholders
|
|
$
|
(170
|
)
|
|
$
|
(384
|
)
|
|
$
|
214
|
|
|
(55.7
|
)%
|
Net loss attributable to common stockholders per weighted average share of common stock - basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
—
|
%
|
FFO available to common stockholders - basic (1)
|
|
$
|
11,637
|
|
|
$
|
10,444
|
|
|
$
|
1,193
|
|
|
11.4
|
%
|
FFO available to common stockholders - diluted (1)
|
|
$
|
11,872
|
|
|
$
|
10,691
|
|
|
$
|
1,181
|
|
|
11.0
|
%
|
FFO per weighted average share of common stock - basic (1)
|
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
0.02
|
|
|
5.3
|
%
|
FFO per weighted average share of common stock - diluted (1)
|
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
0.02
|
|
|
5.3
|
%
|
(1)
|
Refer to the “Funds from Operations” section below within the Management’s Discussion and Analysis section for the definition of FFO.
|
|
|
For the nine months ended September 30,
|
|||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Operating revenues
|
|
|
|
|
|
|
|
|
|||||||
Rental revenue
|
|
$
|
77,021
|
|
|
$
|
68,253
|
|
|
$
|
8,768
|
|
|
12.8
|
%
|
Tenant recovery revenue
|
|
2,517
|
|
|
1,294
|
|
|
1,223
|
|
|
94.5
|
%
|
|||
Total operating revenues
|
|
79,538
|
|
|
69,547
|
|
|
9,991
|
|
|
14.4
|
%
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization
|
|
35,166
|
|
|
30,673
|
|
|
4,493
|
|
|
14.6
|
%
|
|||
Property operating expenses
|
|
8,247
|
|
|
5,062
|
|
|
3,185
|
|
|
62.9
|
%
|
|||
Base management fee
|
|
3,798
|
|
|
3,665
|
|
|
133
|
|
|
3.6
|
%
|
|||
Incentive fee
|
|
2,215
|
|
|
1,760
|
|
|
455
|
|
|
25.9
|
%
|
|||
Administration fee
|
|
1,187
|
|
|
993
|
|
|
194
|
|
|
19.5
|
%
|
|||
General and administrative
|
|
1,754
|
|
|
1,776
|
|
|
(22
|
)
|
|
(1.2
|
)%
|
|||
Impairment charge
|
|
—
|
|
|
3,999
|
|
|
(3,999
|
)
|
|
(100.0
|
)%
|
|||
Total operating expenses
|
|
52,367
|
|
|
47,928
|
|
|
4,439
|
|
|
9.3
|
%
|
|||
Other (expense) income
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
|
(19,275
|
)
|
|
(18,223
|
)
|
|
(1,052
|
)
|
|
5.8
|
%
|
|||
Gain on sale of real estate, net
|
|
1,844
|
|
|
3,993
|
|
|
(2,149
|
)
|
|
(53.8
|
)%
|
|||
Other income
|
|
67
|
|
|
14
|
|
|
53
|
|
|
378.6
|
%
|
|||
Total other expense, net
|
|
(17,364
|
)
|
|
(14,216
|
)
|
|
(3,148
|
)
|
|
22.1
|
%
|
|||
Net income
|
|
9,807
|
|
|
7,403
|
|
|
2,404
|
|
|
32.5
|
%
|
|||
Distributions attributable to Series A, B and D preferred stock
|
|
(7,803
|
)
|
|
(7,330
|
)
|
|
(473
|
)
|
|
6.5
|
%
|
|||
Distributions attributable to senior common stock
|
|
(700
|
)
|
|
(744
|
)
|
|
44
|
|
|
(5.9
|
)%
|
|||
Net income (loss) available (attributable) to common stockholders
|
|
$
|
1,304
|
|
|
$
|
(671
|
)
|
|
$
|
1,975
|
|
|
(294.3
|
)%
|
Net income (loss) available (attributable) to common stockholders per weighted average share of common stock - basic & diluted
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
(266.7
|
)%
|
FFO available to common stockholders - basic (1)
|
|
$
|
34,626
|
|
|
$
|
30,008
|
|
|
$
|
4,618
|
|
|
15.4
|
%
|
FFO available to common stockholders - diluted (1)
|
|
$
|
35,326
|
|
|
$
|
30,752
|
|
|
$
|
4,574
|
|
|
14.9
|
%
|
FFO per weighted average share of common stock - basic (1)
|
|
$
|
1.21
|
|
|
$
|
1.16
|
|
|
$
|
0.05
|
|
|
4.3
|
%
|
FFO per weighted average share of common stock - diluted (1)
|
|
$
|
1.21
|
|
|
$
|
1.16
|
|
|
$
|
0.05
|
|
|
4.3
|
%
|
(1)
|
Refer to the “Funds from Operations” section below within the Management’s Discussion and Analysis section for the definition of FFO.
|
|
|
For the three months ended September 30,
|
|||||||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Rental Revenues
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Same Store Properties
|
|
$
|
20,074
|
|
|
$
|
20,057
|
|
|
$
|
17
|
|
|
0.1
|
%
|
Acquired & Disposed Properties
|
|
4,204
|
|
|
2,355
|
|
|
1,849
|
|
|
78.5
|
%
|
|||
Properties with Vacancy
|
|
930
|
|
|
874
|
|
|
56
|
|
|
6.4
|
%
|
|||
Expanded Properties
|
|
529
|
|
|
529
|
|
|
—
|
|
|
—
|
%
|
|||
|
|
$
|
25,737
|
|
|
$
|
23,815
|
|
|
$
|
1,922
|
|
|
8.1
|
%
|
|
|
For the nine months ended September 30,
|
|||||||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Rental Revenues
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Same Store Properties
|
|
$
|
60,177
|
|
|
$
|
60,017
|
|
|
$
|
160
|
|
|
0.3
|
%
|
Acquired & Disposed Properties
|
|
12,457
|
|
|
4,349
|
|
|
8,108
|
|
|
186.4
|
%
|
|||
Properties with Vacancy
|
|
2,799
|
|
|
2,614
|
|
|
185
|
|
|
7.1
|
%
|
|||
Expanded Properties
|
|
1,588
|
|
|
1,273
|
|
|
315
|
|
|
24.7
|
%
|
|||
|
|
$
|
77,021
|
|
|
$
|
68,253
|
|
|
$
|
8,768
|
|
|
12.8
|
%
|
|
|
For the three months ended September 30,
|
|||||||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Tenant Recovery Revenue
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Same Store Properties
|
|
$
|
485
|
|
|
$
|
373
|
|
|
$
|
112
|
|
|
30.0
|
%
|
Acquired & Disposed Properties
|
|
362
|
|
|
165
|
|
|
197
|
|
|
119.4
|
%
|
|||
Properties with Vacancy
|
|
4
|
|
|
9
|
|
|
(5
|
)
|
|
(55.6
|
)%
|
|||
Expanded Properties
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
%
|
|||
|
|
$
|
854
|
|
|
$
|
550
|
|
|
$
|
304
|
|
|
55.3
|
%
|
|
|
For the nine months ended September 30,
|
|||||||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Tenant Recovery Revenue
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Same Store Properties
|
|
$
|
1,397
|
|
|
$
|
1,027
|
|
|
$
|
370
|
|
|
36.0
|
%
|
Acquired & Disposed Properties
|
|
980
|
|
|
219
|
|
|
761
|
|
|
347.5
|
%
|
|||
Properties with Vacancy
|
|
132
|
|
|
41
|
|
|
91
|
|
|
222.0
|
%
|
|||
Expanded Properties
|
|
8
|
|
|
7
|
|
|
1
|
|
|
14.3
|
%
|
|||
|
|
$
|
2,517
|
|
|
$
|
1,294
|
|
|
$
|
1,223
|
|
|
94.5
|
%
|
|
|
For the three months ended September 30,
|
|||||||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Property Operating Expenses
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Same Store Properties
|
|
$
|
1,074
|
|
|
$
|
1,159
|
|
|
$
|
(85
|
)
|
|
(7.3
|
)%
|
Acquired & Disposed Properties
|
|
1,360
|
|
|
801
|
|
|
559
|
|
|
69.8
|
%
|
|||
Properties with Vacancy
|
|
200
|
|
|
214
|
|
|
(14
|
)
|
|
(6.5
|
)%
|
|||
Expanded Properties
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
%
|
|||
|
|
$
|
2,638
|
|
|
$
|
2,178
|
|
|
$
|
460
|
|
|
21.1
|
%
|
|
|
For the nine months ended September 30,
|
|||||||||||||
|
|
(Dollars in Thousands)
|
|||||||||||||
Property Operating Expenses
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
Same Store Properties
|
|
$
|
3,210
|
|
|
$
|
3,276
|
|
|
$
|
(66
|
)
|
|
(2.0
|
)%
|
Acquired & Disposed Properties
|
|
4,323
|
|
|
1,095
|
|
|
3,228
|
|
|
294.8
|
%
|
|||
Properties with Vacancy
|
|
695
|
|
|
675
|
|
|
20
|
|
|
3.0
|
%
|
|||
Expanded Properties
|
|
19
|
|
|
16
|
|
|
3
|
|
|
18.8
|
%
|
|||
|
|
$
|
8,247
|
|
|
$
|
5,062
|
|
|
$
|
3,185
|
|
|
62.9
|
%
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
||||||||||
Debt Obligations (1)
|
|
$
|
547,635
|
|
|
$
|
53,271
|
|
|
$
|
59,109
|
|
|
$
|
290,101
|
|
|
$
|
145,154
|
|
Interest on Debt Obligations (2)
|
|
108,583
|
|
|
23,149
|
|
|
42,016
|
|
|
26,510
|
|
|
16,908
|
|
|||||
Operating Lease Obligations (3)
|
|
5,995
|
|
|
465
|
|
|
895
|
|
|
640
|
|
|
3,995
|
|
|||||
Purchase Obligations (4)
|
|
890
|
|
|
890
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
$
|
663,103
|
|
|
$
|
77,775
|
|
|
$
|
102,020
|
|
|
$
|
317,251
|
|
|
$
|
166,057
|
|
(1)
|
Debt obligations represent borrowings under our Revolver, which represents
$30.9 million
of the debt obligation due in 2021, our Term Loan, which represents
$75.0 million
of the debt obligation due in 2022, and mortgage notes payable that were outstanding as of
September 30, 2018
. This figure does not include
$0.3 million
of premiums and discounts, net and
$5.2 million
of deferred financing costs, net, which are reflected in mortgage notes payable, net, borrowings under Revolver, net and borrowings under Term Loan, net on the condensed consolidated balance sheets.
|
(2)
|
Interest on debt obligations includes estimated interest on borrowings under our Revolver and Term Loan and mortgage notes payable. The balance and interest rate on our Revolver and Term Loan is variable; thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of
September 30, 2018
.
|
(3)
|
Operating lease obligations represent the ground lease payments due on
four
of our properties.
|
(4)
|
Purchase obligations consist of tenant and capital improvements at
four
of our properties.
|
|
|
For the three months ended September 30,
|
|
For the nine months ended September 30,
|
||||||||||||
|
|
(Dollars in Thousands, Except for Per Share Amounts)
|
|
(Dollars in Thousands, Except for Per Share Amounts)
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Calculation of basic FFO per share of common stock
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
2,677
|
|
|
$
|
2,383
|
|
|
$
|
9,807
|
|
|
$
|
7,403
|
|
Less: Distributions attributable to preferred and senior common stock
|
|
(2,847
|
)
|
|
(2,767
|
)
|
|
(8,503
|
)
|
|
(8,074
|
)
|
||||
Net (loss) income (attributable) available to common stockholders
|
|
$
|
(170
|
)
|
|
$
|
(384
|
)
|
|
$
|
1,304
|
|
|
$
|
(671
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Add: Real estate depreciation and amortization
|
|
$
|
11,807
|
|
|
$
|
10,829
|
|
|
$
|
35,166
|
|
|
$
|
30,673
|
|
Add: Impairment charge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,999
|
|
||||
Less: Gain on sale of real estate, net
|
|
—
|
|
|
(1
|
)
|
|
(1,844
|
)
|
|
(3,993
|
)
|
||||
FFO available to common stockholders - basic
|
|
$
|
11,637
|
|
|
$
|
10,444
|
|
|
$
|
34,626
|
|
|
$
|
30,008
|
|
Weighted average common shares outstanding - basic
|
|
28,734,380
|
|
|
27,234,569
|
|
|
28,532,224
|
|
|
25,833,423
|
|
||||
Basic FFO per weighted average share of common stock
|
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
1.21
|
|
|
$
|
1.16
|
|
Calculation of diluted FFO per share of common stock
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
2,677
|
|
|
$
|
2,383
|
|
|
$
|
9,807
|
|
|
$
|
7,403
|
|
Less: Distributions attributable to preferred and senior common stock
|
|
(2,847
|
)
|
|
(2,767
|
)
|
|
(8,503
|
)
|
|
(8,074
|
)
|
||||
Net (loss) income (attributable) available to common stockholders
|
|
$
|
(170
|
)
|
|
$
|
(384
|
)
|
|
$
|
1,304
|
|
|
$
|
(671
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Add: Real estate depreciation and amortization
|
|
$
|
11,807
|
|
|
$
|
10,829
|
|
|
$
|
35,166
|
|
|
$
|
30,673
|
|
Add: Impairment charge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,999
|
|
||||
Add: Income impact of assumed conversion of senior common stock
|
|
235
|
|
|
247
|
|
|
700
|
|
|
744
|
|
||||
Less: Gain on sale of real estate, net
|
|
—
|
|
|
(1
|
)
|
|
(1,844
|
)
|
|
(3,993
|
)
|
||||
FFO available to common stockholders plus assumed conversions
|
|
$
|
11,872
|
|
|
$
|
10,691
|
|
|
$
|
35,326
|
|
|
$
|
30,752
|
|
Weighted average common shares outstanding - basic
|
|
28,734,380
|
|
|
27,234,569
|
|
|
28,532,224
|
|
|
25,833,423
|
|
||||
Effect of convertible senior common stock
|
|
737,752
|
|
|
773,553
|
|
|
737,752
|
|
|
773,553
|
|
||||
Weighted average common shares outstanding - diluted
|
|
29,472,132
|
|
|
28,008,122
|
|
|
29,269,976
|
|
|
26,606,976
|
|
||||
Diluted FFO per weighted average share of common stock
|
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
1.21
|
|
|
$
|
1.16
|
|
Distributions declared per share of common stock
|
|
$
|
0.375
|
|
|
$
|
0.375
|
|
|
$
|
1.125
|
|
|
$
|
1.125
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Interest Rate Change
|
|
(Decrease) increase to Interest
Expense
|
|
Net increase (decrease) to
Net Income
|
||||
2% Decrease to LIBOR
|
|
$
|
(3,367
|
)
|
|
$
|
3,367
|
|
1% Decrease to LIBOR
|
|
(1,693
|
)
|
|
1,693
|
|
||
1% Increase to LIBOR
|
|
1,005
|
|
|
(1,005
|
)
|
||
2% Increase to LIBOR
|
|
1,326
|
|
|
(1,326
|
)
|
||
3% Increase to LIBOR
|
|
1,647
|
|
|
(1,647
|
)
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Exhibit Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
3.6
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
10.1
|
|
|
|
|
|
11
|
|
|
|
|
|
12
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101.INS***
|
|
XBRL Instance Document
|
|
|
|
101.SCH***
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL***
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB***
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE***
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF***
|
|
XBRL Definition Linkbase
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
***
|
Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2018 and 2017, (iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 and (iv) the Notes to Condensed Consolidated Financial Statements.
|
|
|
|
Gladstone Commercial Corporation
|
||
|
|
|
|
||
Date:
|
October 30, 2018
|
|
By:
|
|
/s/ Mike Sodo
|
|
|
|
|
|
Mike Sodo
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
||
Date:
|
October 30, 2018
|
|
By:
|
|
/s/ David Gladstone
|
|
|
|
|
|
David Gladstone
|
|
|
|
|
|
Chief Executive Officer and
Chairman of the Board of Directors
|
|
|
For the nine months ended September 30,
|
|
For the year ended December 31,
|
|
||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||||
Net income (loss) from continuing operations
|
|
$
|
1,304
|
|
|
$
|
(4,939
|
)
|
|
$
|
(3,698
|
)
|
|
$
|
3,596
|
|
|
$
|
(5,902
|
)
|
(1)
|
$
|
1,527
|
|
|
Add: fixed charges and preferred and senior common distributions
|
|
27,788
|
|
|
35,459
|
|
|
35,075
|
|
|
35,871
|
|
|
33,592
|
|
|
31,506
|
|
|
||||||
Less: preferred and senior common distributions
|
|
(8,503
|
)
|
|
(10,876
|
)
|
|
(7,656
|
)
|
|
(5,101
|
)
|
|
(4,636
|
)
|
|
(4,394
|
)
|
|
||||||
Earnings
|
|
$
|
20,589
|
|
|
$
|
19,644
|
|
|
$
|
23,721
|
|
|
$
|
34,366
|
|
|
$
|
23,054
|
|
|
$
|
28,639
|
|
|
Fixed charges and preferred and senior common distributions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense (2)
|
|
$
|
18,172
|
|
|
$
|
22,855
|
|
|
$
|
25,472
|
|
|
$
|
28,802
|
|
|
$
|
27,284
|
|
|
$
|
25,314
|
|
|
Amortization of deferred financing fees
|
|
1,103
|
|
|
1,715
|
|
|
1,932
|
|
|
1,955
|
|
|
1,656
|
|
|
1,780
|
|
|
||||||
Estimated interest component of rent
|
|
10
|
|
|
13
|
|
|
15
|
|
|
13
|
|
|
16
|
|
|
18
|
|
|
||||||
Preferred and senior common distributions
|
|
8,503
|
|
|
10,876
|
|
|
7,656
|
|
|
5,101
|
|
|
4,636
|
|
|
4,394
|
|
|
||||||
Total fixed charges and preferred and senior common distributions
|
|
$
|
27,788
|
|
|
$
|
35,459
|
|
|
$
|
35,075
|
|
|
$
|
35,871
|
|
|
$
|
33,592
|
|
|
$
|
31,506
|
|
|
Ratio of earnings to combined fixed charges and preferred distributions
|
|
N/A
|
|
(3)
|
N/A
|
(4)
|
N/A
|
(5)
|
N/A
|
(6)
|
N/A
|
(7)
|
N/A
|
|
(8)
|
(1)
|
We recognized a $14.2 million impairment loss and a $5.3 million gain on debt extinguishment as a result of our Roseville, MN deed-in-lieu transaction during the year ended December 31, 2014.
|
(2)
|
Interest expense includes dividends paid on our mandatorily redeemable term preferred stock. We fully redeemed our mandatorily redeemable term preferred stock during the year ended December 31, 2016.
|
(3)
|
For the
nine months ended September 30, 2018
, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by
$7,199
.
|
(4)
|
For the year ended December 31,
2017
, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by
$15,815
.
|
(5)
|
For the year ended December 31,
2016
, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by
$11,354
.
|
(6)
|
For the year ended December 31,
2015
, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by
$1,505
.
|
(7)
|
For the year ended December 31,
2014
, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by
$10,538
.
|
(8)
|
For the year ended December 31,
2013
, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by
$2,867
.
|
|
/s/ David Gladstone
|
David Gladstone
|
Chief Executive Officer and
|
Chairman of the Board of Directors
|
|
/s/ Michael Sodo
|
Michael Sodo
|
Chief Financial Officer
|
|
/s/ David Gladstone
|
David Gladstone
|
Chief Executive Officer
|
|
/s/ Michael Sodo
|
Michael Sodo
|
Chief Financial Officer
|