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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cole Real Estate Investments, Inc. | NYSE:COLE | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 14.98 | 0 | 01:00:00 |
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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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¨
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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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26-1846406
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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2325 East Camelback Road, Suite 1100
Phoenix, Arizona, 85016
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(602) 778-8700
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(Address of principal executive offices; zip code)
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(Registrant’s telephone number, including area code)
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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x
(Do not check if smaller reporting company)
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Smaller reporting company
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¨
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Item 1. Financial Statements
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Item 1.
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FINANCIAL STATEMENTS
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September 30, 2013
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December 31, 2012
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||||
ASSETS
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||||
Investment in real estate assets:
|
|
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||||
Land
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$
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1,531,115
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$
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1,490,843
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Buildings and improvements, less accumulated depreciation of $277,770 and $187,870, respectively
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4,386,349
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4,222,363
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Acquired intangible lease assets, less accumulated amortization of $174,831 and $122,258, respectively
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828,801
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860,963
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Total investment in real estate assets, net
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6,746,265
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6,574,169
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Investment in notes receivable, net
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90,497
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90,358
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Investment in marketable securities
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11,154
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51,103
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Investment in marketable securities pledged as collateral
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260,790
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266,098
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Investment in unconsolidated entities
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92,035
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96,785
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Total investment in real estate assets and related assets, net
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7,200,741
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7,078,513
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Assets related to real estate held for sale, net
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60,739
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15,485
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Cash and cash equivalents
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185,786
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192,504
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Restricted cash
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31,170
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18,444
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Rents and tenant receivables, less allowance for doubtful accounts of $496 and $337, respectively
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105,867
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79,760
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Intangible and other assets, net
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110,591
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11,790
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Deferred financing costs, less accumulated amortization of $18,372 and $23,105, respectively
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59,275
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57,229
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Goodwill
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258,876
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—
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Leasehold improvements and property and equipment, net
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21,005
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—
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Due from affiliates
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13,445
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—
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Total assets
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$
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8,047,495
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$
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7,453,725
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LIABILITIES AND EQUITY
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||||
Notes payable and other borrowings
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$
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3,836,596
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$
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3,292,048
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Accounts payable and accrued expenses
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75,338
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42,756
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Due to affiliates
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—
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4,525
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Acquired below market lease intangibles, less accumulated amortization of $23,430 and $16,389, respectively
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113,878
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113,607
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Dividends payable
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28,720
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26,399
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Contingent consideration
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260,227
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5,341
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Deferred rent, derivative and other liabilities
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49,298
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51,317
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Liabilities related to real estate held for sale, net
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35,370
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322
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Total liabilities
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4,399,427
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3,536,315
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Commitments and contingencies
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||||
Redeemable common stock
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—
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234,578
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EQUITY:
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||||
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding
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—
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—
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Common stock, $0.01 par value; 990,000,000 shares authorized, 469,364,805 and 479,547,099 shares outstanding, respectively
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4,693
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4,795
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Capital in excess of par value
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4,181,120
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4,068,015
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Accumulated dividends in excess of earnings
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(572,310
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)
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(416,886
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)
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Accumulated other comprehensive income
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18,020
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23,101
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Total stockholders’ equity
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3,631,523
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3,679,025
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Noncontrolling interests
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16,545
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3,807
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Total equity
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3,648,068
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3,682,832
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Total liabilities and equity
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$
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8,047,495
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$
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7,453,725
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2013
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2012
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2013
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2012
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||||||||
Revenues:
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Real estate investment revenue
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$
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159,803
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$
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131,913
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$
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467,223
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$
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361,475
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Interest income on real estate-related investments
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6,917
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8,247
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22,702
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18,488
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||||
Private capital management revenue
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199,831
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—
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282,474
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—
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||||
Total revenue
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366,551
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140,160
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772,399
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379,963
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||||
Expenses:
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Reallowed fees and commissions
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130,398
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—
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169,360
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—
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||||
General and administrative expenses
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55,252
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3,291
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100,719
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12,001
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Merger related stock-based compensation
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13,329
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—
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23,607
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—
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||||
Property operating expenses
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17,685
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12,701
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49,853
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33,037
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Property and asset management expenses
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263
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11,717
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15,316
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32,384
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||||
Merger and acquisition related expenses
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25,237
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13,612
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52,660
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46,431
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Depreciation and amortization
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53,797
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40,760
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156,698
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110,939
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||||
Total operating expenses
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295,961
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82,081
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568,213
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234,792
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Operating income
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70,590
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58,079
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204,186
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145,171
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|
||||
Other income (expense):
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Other income
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285
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483
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1,715
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5,362
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||||
Interest expense
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(40,520
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)
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(43,902
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)
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(127,464
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)
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(100,152
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)
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||||
Total other expense
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(40,235
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)
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(43,419
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)
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(125,749
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)
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(94,790
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)
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||||
Income from continuing operations before income taxes
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30,355
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14,660
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78,437
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50,381
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|
||||
Provision for income taxes
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(9,426
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)
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—
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(9,191
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)
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—
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|
||||
Income from continuing operations
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20,929
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14,660
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69,246
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50,381
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|
||||
Discontinued operations:
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||||||||
Income from discontinued operations
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556
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|
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3,910
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2,581
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12,448
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|
||||
Gain on sale of real estate assets
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3,078
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—
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22,085
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14,781
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|
||||
Income from discontinued operations
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3,634
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3,910
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24,666
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27,229
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|
||||
Net income
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24,563
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18,570
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93,912
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77,610
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|
||||
Net income (loss) allocated to noncontrolling interests
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374
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3
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589
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(117
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)
|
||||
Net income attributable to the Company
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$
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24,189
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$
|
18,567
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$
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93,323
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$
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77,727
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||||||||
Basic earnings per common share:
|
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|
|
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|
||||||||
Income from continuing operations
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$
|
0.04
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$
|
0.03
|
|
|
$
|
0.14
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|
|
$
|
0.11
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|
Income from discontinued operations
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.06
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|
Net income attributable to the Company
|
$
|
0.05
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$
|
0.04
|
|
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$
|
0.19
|
|
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$
|
0.17
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|
Diluted earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.04
|
|
|
$
|
0.03
|
|
|
$
|
0.14
|
|
|
$
|
0.11
|
|
Income from discontinued operations
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.06
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Net income attributable to the Company
|
$
|
0.05
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|
$
|
0.04
|
|
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$
|
0.19
|
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|
$
|
0.17
|
|
Weighted average number of common shares outstanding:
|
|
|
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|
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|
|||||||||
Basic
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479,370,020
|
|
|
476,353,149
|
|
|
482,720,629
|
|
|
457,996,321
|
|
||||
Diluted
|
495,479,956
|
|
|
476,353,149
|
|
|
489,288,861
|
|
|
457,996,321
|
|
||||
Dividends declared per common share issued
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
$
|
0.51
|
|
|
$
|
0.49
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income
|
$
|
24,563
|
|
|
$
|
18,570
|
|
|
$
|
93,912
|
|
|
$
|
77,610
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on marketable securities
|
2,890
|
|
|
44,349
|
|
|
(10,091
|
)
|
|
43,038
|
|
||||
Reclassification of previous unrealized gain on marketable securities into net income
|
—
|
|
|
—
|
|
|
(612
|
)
|
|
—
|
|
||||
Unrealized (loss) gain on interest rate swaps
|
(3,726
|
)
|
|
(2,153
|
)
|
|
3,058
|
|
|
(7,830
|
)
|
||||
Reclassification of previous unrealized loss on interest rate swaps into net income
|
—
|
|
|
9,263
|
|
|
2,564
|
|
|
9,263
|
|
||||
Total other comprehensive (loss) income
|
(836
|
)
|
|
51,459
|
|
|
(5,081
|
)
|
|
44,471
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total comprehensive income
|
23,727
|
|
|
70,029
|
|
|
88,831
|
|
|
122,081
|
|
||||
Comprehensive income (loss) attributable to noncontrolling interests
|
374
|
|
|
3
|
|
|
589
|
|
|
(117
|
)
|
||||
Total comprehensive income attributable to the Company
|
$
|
23,353
|
|
|
$
|
70,026
|
|
|
$
|
88,242
|
|
|
$
|
122,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||||||||
|
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|
Capital in
|
|
Accumulated
|
|
Accumulated
|
|
|
|
|
|
|
|||||||||||||||||
|
Common Stock
|
|
Excess
|
|
Dividends
|
|
Other
|
|
Total
|
|
Non-
|
|
|
|||||||||||||||||
|
Number of
|
|
Par
|
|
of Par
|
|
in Excess of
|
|
Comprehensive
|
|
Stockholders’
|
|
controlling
|
|
Total
|
|||||||||||||||
|
Shares
|
|
Value
|
|
Value
|
|
Earnings
|
|
Income
|
|
Equity
|
|
Interests
|
|
Equity
|
|||||||||||||||
Balance, January 1, 2013
|
479,547,099
|
|
|
$
|
4,795
|
|
|
$
|
4,068,015
|
|
|
$
|
(416,886
|
)
|
|
$
|
23,101
|
|
|
$
|
3,679,025
|
|
|
$
|
3,807
|
|
|
$
|
3,682,832
|
|
Issuance of common stock
|
7,830,909
|
|
|
78
|
|
|
74,317
|
|
|
—
|
|
|
—
|
|
|
74,395
|
|
|
—
|
|
|
74,395
|
|
|||||||
Issuance of common stock related to the merger
|
8,568,980
|
|
|
86
|
|
|
90,574
|
|
|
—
|
|
|
—
|
|
|
90,660
|
|
|
—
|
|
|
90,660
|
|
|||||||
Merger related stock-based compensation
|
—
|
|
|
—
|
|
|
23,607
|
|
|
—
|
|
|
—
|
|
|
23,607
|
|
|
—
|
|
|
23,607
|
|
|||||||
Equity plans stock-based compensation
|
—
|
|
|
—
|
|
|
1,831
|
|
|
—
|
|
|
—
|
|
|
1,831
|
|
|
|
|
1,831
|
|
||||||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,206
|
|
|
13,206
|
|
|||||||
Dividends to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,057
|
)
|
|
(1,057
|
)
|
|||||||
Dividends to investors
|
—
|
|
|
—
|
|
|
—
|
|
|
(248,747
|
)
|
|
—
|
|
|
(248,747
|
)
|
|
—
|
|
|
(248,747
|
)
|
|||||||
Redemptions and cancellations of common stock
|
(6,174,020
|
)
|
|
(62
|
)
|
|
(62,006
|
)
|
|
—
|
|
|
—
|
|
|
(62,068
|
)
|
|
—
|
|
|
(62,068
|
)
|
|||||||
Tender repurchase of common stock
|
(20,408,163
|
)
|
|
(204
|
)
|
|
(249,796
|
)
|
|
—
|
|
|
—
|
|
|
(250,000
|
)
|
|
—
|
|
|
(250,000
|
)
|
|||||||
Changes in redeemable common stock
|
—
|
|
|
—
|
|
|
234,578
|
|
|
—
|
|
|
—
|
|
|
234,578
|
|
|
—
|
|
|
234,578
|
|
|||||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
93,323
|
|
|
(5,081
|
)
|
|
88,242
|
|
|
589
|
|
|
88,831
|
|
|||||||
Balance,
September 30, 2013
|
469,364,805
|
|
|
$
|
4,693
|
|
|
$
|
4,181,120
|
|
|
$
|
(572,310
|
)
|
|
$
|
18,020
|
|
|
$
|
3,631,523
|
|
|
$
|
16,545
|
|
|
$
|
3,648,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
Capital in
|
|
Accumulated
|
|
Accumulated
|
|
|
|
|
|
|
|||||||||||||||||
|
Common Stock
|
|
Excess
|
|
Dividends
|
|
Other
|
|
Total
|
|
Non-
|
|
|
|||||||||||||||||
|
Number of
|
|
Par
|
|
of Par
|
|
in Excess of
|
|
Comprehensive
|
|
Stockholders’
|
|
controlling
|
|
Total
|
|||||||||||||||
|
Shares
|
|
Value
|
|
Value
|
|
Earnings
|
|
Income
|
|
Equity
|
|
Interests
|
|
Equity
|
|||||||||||||||
Balance, January 1, 2012
|
385,236,590
|
|
|
$
|
3,852
|
|
|
$
|
3,322,924
|
|
|
$
|
(319,031
|
)
|
|
$
|
(24,757
|
)
|
|
$
|
2,982,988
|
|
|
$
|
1,275
|
|
|
$
|
2,984,263
|
|
Issuance of common stock
|
96,667,486
|
|
|
967
|
|
|
956,882
|
|
|
—
|
|
|
—
|
|
|
957,849
|
|
|
—
|
|
|
957,849
|
|
|||||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,938
|
|
|
2,938
|
|
|||||||
Dividends to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(312
|
)
|
|
(312
|
)
|
|||||||
Dividends to investors
|
—
|
|
|
—
|
|
|
—
|
|
|
(222,966
|
)
|
|
—
|
|
|
(222,966
|
)
|
|
—
|
|
|
(222,966
|
)
|
|||||||
Commissions on stock sales and related dealer manager fees
|
—
|
|
|
—
|
|
|
(72,926
|
)
|
|
—
|
|
|
—
|
|
|
(72,926
|
)
|
|
—
|
|
|
(72,926
|
)
|
|||||||
Other offering costs
|
—
|
|
|
—
|
|
|
(13,188
|
)
|
|
—
|
|
|
—
|
|
|
(13,188
|
)
|
|
—
|
|
|
(13,188
|
)
|
|||||||
Redemptions of common stock
|
(4,713,238
|
)
|
|
(47
|
)
|
|
(46,071
|
)
|
|
—
|
|
|
—
|
|
|
(46,118
|
)
|
|
—
|
|
|
(46,118
|
)
|
|||||||
Changes in redeemable common stock
|
—
|
|
|
—
|
|
|
(78,846
|
)
|
|
—
|
|
|
—
|
|
|
(78,846
|
)
|
|
—
|
|
|
(78,846
|
)
|
|||||||
Purchase of investment from noncontrolling interest
|
—
|
|
|
—
|
|
|
(730
|
)
|
|
—
|
|
|
—
|
|
|
(730
|
)
|
|
—
|
|
|
(730
|
)
|
|||||||
Comprehensive income(loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
77,727
|
|
|
44,471
|
|
|
122,198
|
|
|
(117
|
)
|
|
122,081
|
|
|||||||
Balance,
September 30, 2012
|
477,190,838
|
|
|
$
|
4,772
|
|
|
$
|
4,068,045
|
|
|
$
|
(464,270
|
)
|
|
$
|
19,714
|
|
|
$
|
3,628,261
|
|
|
$
|
3,784
|
|
|
$
|
3,632,045
|
|
|
Nine Months Ended September 30,
|
||||||
|
2013
|
|
2012
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
93,912
|
|
|
$
|
77,610
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
99,054
|
|
|
80,828
|
|
||
Amortization of intangibles and deferred financing costs, net
|
72,245
|
|
|
54,043
|
|
||
Accretion of marketable securities and notes receivable, net
|
(4,065
|
)
|
|
(2,799
|
)
|
||
Equity in income of unconsolidated entities
|
(2,365
|
)
|
|
(1,331
|
)
|
||
Return on investment from unconsolidated entities
|
2,365
|
|
|
1,331
|
|
||
Gain on sale of real estate assets
|
(22,085
|
)
|
|
(14,781
|
)
|
||
Loss on sale of marketable securities
|
1,331
|
|
|
—
|
|
||
Loss on derivatives and extinguishment of debt
|
4,268
|
|
|
9,263
|
|
||
Merger related stock-based compensation
|
23,607
|
|
|
—
|
|
||
Equity plans stock-based compensation
|
1,831
|
|
|
—
|
|
||
Loss on change in fair value of contingent consideration, net
|
19,278
|
|
|
288
|
|
||
Other operating activities
|
573
|
|
|
(413
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Rents and tenant receivables
|
(28,229
|
)
|
|
(27,147
|
)
|
||
Intangible and other assets
|
(4,348
|
)
|
|
(6,131
|
)
|
||
Due from affiliates
|
(9,138
|
)
|
|
—
|
|
||
Accounts payable and accrued expenses
|
19,587
|
|
|
9,807
|
|
||
Deferred rent and other liabilities
|
(11,699
|
)
|
|
(1,997
|
)
|
||
Due to affiliates
|
(4,525
|
)
|
|
5
|
|
||
Net cash provided by operating activities
|
251,597
|
|
|
178,576
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Investment in real estate and related assets
|
(442,515
|
)
|
|
(1,743,469
|
)
|
||
Cash paid in connection with the merger, net of cash acquired
|
(7,251
|
)
|
|
—
|
|
||
Return of investment and repayment of advance from unconsolidated entities
|
5,318
|
|
|
22,375
|
|
||
Proceeds from sale and condemnation of real estate assets
|
98,194
|
|
|
69,222
|
|
||
Proceeds from the sale of marketable securities
|
36,533
|
|
|
—
|
|
||
Payment of property escrow deposits
|
(64,894
|
)
|
|
(33,532
|
)
|
||
Refund of property escrow deposits
|
49,594
|
|
|
30,571
|
|
||
Change in restricted cash
|
(12,726
|
)
|
|
694
|
|
||
Other investing activities, net
|
(143
|
)
|
|
648
|
|
||
Net cash used in investing activities
|
(337,890
|
)
|
|
(1,653,491
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock
|
—
|
|
|
832,885
|
|
||
Offering costs on issuance of common stock
|
—
|
|
|
(87,195
|
)
|
||
Redemptions of common stock
|
(62,068
|
)
|
|
(46,118
|
)
|
||
Tender repurchase of common stock
|
(250,000
|
)
|
|
—
|
|
||
Dividends to investors
|
(172,031
|
)
|
|
(93,442
|
)
|
||
Proceeds from notes payable and other borrowings
|
871,310
|
|
|
1,482,508
|
|
||
Repayment of notes payable and other borrowings
|
(302,708
|
)
|
|
(726,953
|
)
|
||
Deferred financing costs paid
|
(12,592
|
)
|
|
(14,275
|
)
|
||
Contributions from noncontrolling interests
|
13,206
|
|
|
2,938
|
|
||
Other financing activities, net
|
(5,542
|
)
|
|
(7,989
|
)
|
||
Net cash provided by financing activities
|
79,575
|
|
|
1,342,359
|
|
||
Net decrease in cash and cash equivalents
|
(6,718
|
)
|
|
(132,556
|
)
|
||
Cash and cash equivalents, beginning of period
|
192,504
|
|
|
216,353
|
|
||
Cash and cash equivalents, end of period
|
$
|
185,786
|
|
|
$
|
83,797
|
|
Buildings
|
40 years
|
Tenant improvements
|
Lesser of useful life or lease term
|
Intangible lease assets
|
Lease term
|
|
Initially Reported as of June 30, 2013
|
|
Measurement Period Adjustments
|
|
As Revised as of September 30, 2013
|
||||||
Estimated Fair Value of Consideration Transferred:
|
|
|
|
|
|
||||||
Cash
|
$
|
21,886
|
|
|
$
|
—
|
|
|
$
|
21,886
|
|
Common stock - Upfront Stock Consideration
|
75,550
|
|
|
—
|
|
|
75,550
|
|
|||
Common stock - Listing Consideration
|
15,110
|
|
|
—
|
|
|
15,110
|
|
|||
Merger Contingent Consideration
|
209,553
|
|
|
27,928
|
|
|
237,481
|
|
|||
Total consideration transferred
|
$
|
322,099
|
|
|
$
|
27,928
|
|
|
$
|
350,027
|
|
|
Initially Reported as of June 30, 2013
|
|
Measurement Period Adjustments
|
|
As Revised as of September 30, 2013
|
||||||
Identifiable Assets Acquired at Fair Value:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
14,635
|
|
|
$
|
—
|
|
|
$
|
14,635
|
|
Leasehold improvements and property and equipment
|
21,495
|
|
|
—
|
|
|
21,495
|
|
|||
Due from affiliates
|
4,304
|
|
|
—
|
|
|
4,304
|
|
|||
Investment in unconsolidated entities
|
570
|
|
|
—
|
|
|
570
|
|
|||
Intangible assets
|
70,092
|
|
|
1,852
|
|
|
71,944
|
|
|||
Program development costs and other assets
|
24,126
|
|
|
(9,393
|
)
|
|
14,733
|
|
|||
Total identifiable assets acquired
|
135,222
|
|
|
(7,541
|
)
|
|
127,681
|
|
|||
|
|
|
|
|
|
||||||
Identifiable Liabilities Assumed at Fair Value:
|
|
|
|
|
|
||||||
Accounts payable and accrued expenses
|
23,619
|
|
|
—
|
|
|
23,619
|
|
|||
Above market lease liabilities
|
5,183
|
|
|
—
|
|
|
5,183
|
|
|||
Deferred tax liabilities, net
|
13,424
|
|
|
(5,696
|
)
|
|
7,728
|
|
|||
Total liabilities assumed
|
42,226
|
|
|
(5,696
|
)
|
|
36,530
|
|
|||
|
|
|
|
|
|
||||||
Net identifiable assets acquired
|
92,996
|
|
|
(1,845
|
)
|
|
91,151
|
|
|||
Goodwill
|
229,103
|
|
|
29,773
|
|
|
258,876
|
|
|||
Net assets acquired
|
$
|
322,099
|
|
|
$
|
27,928
|
|
|
$
|
350,027
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Pro forma basis:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
372,470
|
|
|
$
|
178,878
|
|
|
$
|
828,751
|
|
|
$
|
485,416
|
|
Net income
|
$
|
36,567
|
|
|
$
|
8,760
|
|
|
$
|
150,002
|
|
|
$
|
20,756
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Real Estate Investment
|
|
|
|
|
|
|
|
||||||||
Rental and other property income
|
$
|
144,560
|
|
|
$
|
121,105
|
|
|
$
|
424,254
|
|
|
$
|
331,937
|
|
Tenant reimbursement income
|
15,243
|
|
|
10,808
|
|
|
42,969
|
|
|
29,538
|
|
||||
Interest income on notes receivable
|
1,959
|
|
|
1,769
|
|
|
5,818
|
|
|
4,617
|
|
||||
Interest income on marketable securities
|
4,958
|
|
|
6,478
|
|
|
16,884
|
|
|
13,871
|
|
||||
Total real estate investment revenue
|
166,720
|
|
|
140,160
|
|
|
489,925
|
|
|
379,963
|
|
||||
General and administrative expenses
|
12,462
|
|
|
3,291
|
|
|
29,250
|
|
|
12,001
|
|
||||
Merger related stock-based compensation
|
13,329
|
|
|
—
|
|
|
23,607
|
|
|
—
|
|
||||
Property operating expenses
|
17,685
|
|
|
12,701
|
|
|
49,853
|
|
|
33,037
|
|
||||
Property and asset management expenses
|
263
|
|
|
11,717
|
|
|
15,316
|
|
|
32,384
|
|
||||
Merger and acquisition related expenses
|
25,237
|
|
|
13,612
|
|
|
52,660
|
|
|
46,431
|
|
||||
Depreciation and amortization
|
49,834
|
|
|
40,760
|
|
|
146,677
|
|
|
110,939
|
|
||||
Total operating expenses
|
118,810
|
|
|
82,081
|
|
|
317,363
|
|
|
234,792
|
|
||||
Total interest and other expense, net
|
(40,242
|
)
|
|
(43,419
|
)
|
|
(125,763
|
)
|
|
(94,790
|
)
|
||||
Income from continuing operations
|
7,668
|
|
|
14,660
|
|
|
46,799
|
|
|
50,381
|
|
||||
Income from discontinued operations
|
3,634
|
|
|
3,910
|
|
|
24,666
|
|
|
27,229
|
|
||||
Net income
|
$
|
11,302
|
|
|
$
|
18,570
|
|
|
$
|
71,465
|
|
|
$
|
77,610
|
|
|
|
|
|
|
|
|
|
||||||||
Private Capital Management
|
|
|
|
|
|
|
|
||||||||
Dealer manager fees, selling commissions and offering reimbursements
|
$
|
172,864
|
|
|
$
|
—
|
|
|
$
|
224,682
|
|
|
$
|
—
|
|
Transaction service fees
|
16,883
|
|
|
—
|
|
|
38,392
|
|
|
—
|
|
||||
Management fees and reimbursements
|
10,084
|
|
|
—
|
|
|
19,400
|
|
|
—
|
|
||||
Total private capital management revenue
|
199,831
|
|
|
—
|
|
|
282,474
|
|
|
—
|
|
||||
Reallowed fees and commissions
|
130,398
|
|
|
—
|
|
|
169,360
|
|
|
—
|
|
||||
General and administrative expenses
|
42,790
|
|
|
—
|
|
|
71,469
|
|
|
—
|
|
||||
Depreciation and amortization
|
3,963
|
|
|
—
|
|
|
10,021
|
|
|
—
|
|
||||
Total operating expenses
|
177,151
|
|
|
—
|
|
|
250,850
|
|
|
—
|
|
||||
Total other income
|
7
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Income before income taxes
|
22,687
|
|
|
—
|
|
|
31,638
|
|
|
—
|
|
||||
Provision for income taxes
|
(9,426
|
)
|
|
—
|
|
|
(9,191
|
)
|
|
—
|
|
||||
Net income
|
$
|
13,261
|
|
|
$
|
—
|
|
|
$
|
22,447
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Total Company
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
366,551
|
|
|
$
|
140,160
|
|
|
$
|
772,399
|
|
|
$
|
379,963
|
|
Total operating expenses
|
295,961
|
|
|
82,081
|
|
|
568,213
|
|
|
234,792
|
|
||||
Total interest and other expense, net
|
(40,235
|
)
|
|
(43,419
|
)
|
|
(125,749
|
)
|
|
(94,790
|
)
|
||||
Provision for income taxes
|
(9,426
|
)
|
|
—
|
|
|
(9,191
|
)
|
|
—
|
|
||||
Income from continuing operations
|
20,929
|
|
|
14,660
|
|
|
69,246
|
|
|
50,381
|
|
||||
Income from discontinued operations
|
3,634
|
|
|
3,910
|
|
|
24,666
|
|
|
27,229
|
|
||||
Net income
|
$
|
24,563
|
|
|
$
|
18,570
|
|
|
$
|
93,912
|
|
|
$
|
77,610
|
|
|
Total Assets as of
|
||||||
|
September 30, 2013
|
|
December 31, 2012
|
||||
Real estate investment
|
$
|
7,621,240
|
|
|
$
|
7,453,725
|
|
Private capital management
|
426,255
|
|
|
—
|
|
||
Total company
|
$
|
8,047,495
|
|
|
$
|
7,453,725
|
|
|
Balance as of
September 30, 2013 |
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
1,248
|
|
|
$
|
—
|
|
|
$
|
1,248
|
|
|
$
|
—
|
|
Marketable securities
|
271,944
|
|
|
—
|
|
|
—
|
|
|
271,944
|
|
||||
Total assets
|
$
|
273,192
|
|
|
$
|
—
|
|
|
$
|
1,248
|
|
|
$
|
271,944
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
(20,317
|
)
|
|
$
|
—
|
|
|
$
|
(20,317
|
)
|
|
$
|
—
|
|
Contingent consideration
|
(260,227
|
)
|
|
—
|
|
|
—
|
|
|
(260,227
|
)
|
||||
Total liabilities
|
$
|
(280,544
|
)
|
|
$
|
—
|
|
|
$
|
(20,317
|
)
|
|
$
|
(260,227
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Balance as of
December 31, 2012 |
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Marketable securities
|
$
|
317,201
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
317,201
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
(23,046
|
)
|
|
$
|
—
|
|
|
$
|
(23,046
|
)
|
|
$
|
—
|
|
Contingent consideration
|
(5,341
|
)
|
|
—
|
|
|
—
|
|
|
(5,341
|
)
|
||||
Total liabilities
|
$
|
(28,387
|
)
|
|
$
|
—
|
|
|
$
|
(23,046
|
)
|
|
$
|
(5,341
|
)
|
|
Marketable Securities
|
|
Contingent Consideration
|
||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30, 2013
|
|
September 30, 2013
|
|
September 30, 2013
|
|
September 30, 2013
|
||||||||
Balance at beginning of period
|
$
|
268,017
|
|
|
$
|
317,201
|
|
|
$
|
211,145
|
|
|
$
|
5,341
|
|
Total gains and losses
|
|
|
|
|
|
|
|
||||||||
Reclassification of previous unrealized gain on marketable securities into net income
|
—
|
|
|
(612
|
)
|
|
—
|
|
|
—
|
|
||||
Unrealized gain (loss) included in other comprehensive income, net
|
2,890
|
|
|
(10,091
|
)
|
|
—
|
|
|
—
|
|
||||
Changes in fair value included in net income, net
|
—
|
|
|
—
|
|
|
22,623
|
|
|
19,278
|
|
||||
Purchases, measurement period adjustments, settlements, sales and accretion
|
|
|
|
|
|
|
|
||||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
209,553
|
|
||||
Measurement period adjustments
|
—
|
|
|
—
|
|
|
27,928
|
|
|
27,928
|
|
||||
Settlements
|
—
|
|
|
—
|
|
|
(1,469
|
)
|
|
(1,873
|
)
|
||||
Sales
|
—
|
|
|
(37,864
|
)
|
|
—
|
|
|
—
|
|
||||
Accretion included in net income, net
|
1,037
|
|
|
3,310
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
271,944
|
|
|
$
|
271,944
|
|
|
$
|
260,227
|
|
|
$
|
260,227
|
|
|
Marketable Securities
|
|
Contingent Consideration
|
||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30, 2012
|
|
September 30, 2012
|
|
September 30, 2012
|
|
September 30, 2012
|
||||||||
Balance at beginning of period
|
$
|
274,761
|
|
|
$
|
114,129
|
|
|
$
|
7,991
|
|
|
$
|
5,519
|
|
Total gains and losses
|
|
|
|
|
|
|
|
||||||||
Unrealized gain included in other comprehensive income, net
|
44,349
|
|
|
43,038
|
|
|
—
|
|
|
—
|
|
||||
Changes in fair value included in net income, net
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
288
|
|
||||
Purchases, settlements and accretion
|
|
|
|
|
|
|
|
||||||||
Purchases
|
22,362
|
|
|
183,427
|
|
|
4,352
|
|
|
6,494
|
|
||||
Settlements
|
—
|
|
|
—
|
|
|
(5,999
|
)
|
|
(5,999
|
)
|
||||
Accretion included in net income, net
|
1,124
|
|
|
2,002
|
|
|
—
|
|
|
—
|
|
||||
Balance at end of period
|
$
|
342,596
|
|
|
$
|
342,596
|
|
|
$
|
6,302
|
|
|
$
|
6,302
|
|
|
September 30, 2013
|
||
Land
|
$
|
61,572
|
|
Building and improvements
|
324,806
|
|
|
Acquired in-place leases
|
34,727
|
|
|
Acquired above market leases
|
1,136
|
|
|
Acquired below market leases
|
(11,153
|
)
|
|
Fair value adjustment of assumed note payable
|
(362
|
)
|
|
Total purchase price
|
$
|
410,726
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Pro forma basis:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
371,188
|
|
|
$
|
161,636
|
|
|
$
|
796,324
|
|
|
$
|
445,241
|
|
Net income
|
$
|
50,110
|
|
|
$
|
22,756
|
|
|
$
|
121,473
|
|
|
$
|
90,719
|
|
|
September 30, 2012
|
||
Land
|
$
|
328,363
|
|
Building and improvements
|
950,557
|
|
|
Acquired in-place leases
|
173,737
|
|
|
Acquired above market leases
|
28,174
|
|
|
Acquired below market leases
|
(27,744
|
)
|
|
Total purchase price
|
$
|
1,453,087
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Pro forma basis:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
157,462
|
|
|
$
|
128,863
|
|
|
$
|
465,594
|
|
|
$
|
343,060
|
|
Net income
|
$
|
32,175
|
|
|
$
|
12,603
|
|
|
$
|
142,990
|
|
|
$
|
25,651
|
|
|
Amortized Cost Basis
|
|
Unrealized Gain
|
|
Fair Value
|
||||||
Marketable securities as of December 31, 2012
|
$
|
271,054
|
|
|
$
|
46,147
|
|
|
$
|
317,201
|
|
Net accretion on marketable securities
|
3,310
|
|
|
—
|
|
|
3,310
|
|
|||
Decrease in fair value of marketable securities
|
—
|
|
|
(10,091
|
)
|
|
(10,091
|
)
|
|||
Decrease due to sale of marketable securities
|
(37,864
|
)
|
|
(612
|
)
|
|
(38,476
|
)
|
|||
Marketable securities as of September 30, 2013
|
$
|
236,500
|
|
|
$
|
35,444
|
|
|
$
|
271,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
Due within one year
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
—
|
|
|
—
|
|
||
Due after five years through ten years
|
236,500
|
|
|
271,944
|
|
||
Due after ten years
|
—
|
|
|
—
|
|
||
|
$
|
236,500
|
|
|
$
|
271,944
|
|
|
September 30, 2013
|
|
December 31, 2012
|
|
||||
Assets:
|
|
|
|
|
||||
Investment in real estate assets, net
|
$
|
76,846
|
|
|
$
|
450,214
|
|
|
Straight-line rent receivables
|
$
|
976
|
|
|
$
|
12,698
|
|
|
Liabilities:
|
|
|
|
|
|
|
||
Notes payable
|
$
|
—
|
|
|
$
|
180,250
|
|
(1)
|
Below market lease liabilities, net
|
$
|
1,974
|
|
|
$
|
8,966
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Total revenue
|
$
|
2,153
|
|
|
$
|
12,878
|
|
|
$
|
8,124
|
|
|
$
|
39,962
|
|
Total expenses
|
1,597
|
|
|
8,968
|
|
|
5,543
|
|
|
27,514
|
|
||||
Income from discontinued operations
|
556
|
|
|
3,910
|
|
|
2,581
|
|
|
12,448
|
|
||||
Gain on sale of real estate assets
|
3,078
|
|
|
—
|
|
|
22,085
|
|
|
14,781
|
|
||||
Total income from discontinued operations
|
$
|
3,634
|
|
|
$
|
3,910
|
|
|
$
|
24,666
|
|
|
$
|
27,229
|
|
|
September 30, 2013
|
|
December 31, 2012
|
||||
Investment in real estate assets, net
|
$
|
59,571
|
|
|
$
|
15,376
|
|
Other assets
|
1,168
|
|
|
109
|
|
||
Assets related to real estate held for sale, net
|
$
|
60,739
|
|
|
$
|
15,485
|
|
|
|
|
|
||||
Notes payable
|
$
|
34,300
|
|
|
$
|
—
|
|
Other liabilities
|
1,070
|
|
|
$
|
322
|
|
|
Liabilities related to real estate assets held for sale
|
$
|
35,370
|
|
|
$
|
322
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of (Liabilities)
|
||||||||
|
|
|
Outstanding Notional
|
|
|
|
|
|
|
|
and Assets
|
||||||||
|
Balance Sheet
|
|
Amount as of
|
|
Interest
|
|
Effective
|
|
Maturity
|
|
September 30,
|
|
December 31,
|
||||||
|
Location
|
|
September 30, 2013
|
|
Rates
(1)
|
|
Dates
|
|
Dates
|
|
2013
|
|
2012
|
||||||
Interest Rate Swaps
|
Deferred rent, derivative and other liabilities
|
|
$
|
1,186,572
|
|
|
3.15% to 6.83%
|
|
12/18/2009 to 7/17/2013
|
|
6/27/2014 to 4/1/2021
|
|
$
|
(20,317
|
)
|
|
$
|
(22,601
|
)
|
Interest Rate Swaps
|
Intangible and other assets
(2)
|
|
$
|
65,000
|
|
|
3.27% to 4.49%
|
|
11/20/2012 to 12/14/2012
|
|
1/8/2018 to 11/20/2019
|
|
$
|
1,248
|
|
|
$
|
(445
|
)
|
(1)
|
The interest rates consist of the underlying index swapped to a fixed rate and the applicable interest rate spread.
|
(2)
|
As of
December 31, 2012
, these interest rate swaps were in a liability position and are included in deferred rent, derivative and other liabilities in the accompanying condensed consolidated unaudited balance sheet as of
December 31, 2012
.
|
|
Amount of (Loss) Gain Recognized in Other
Comprehensive Income
|
|
Amount of Loss Reclassified from Accumulated Other Comprehensive Income to Net Income
(1)
|
||||||||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|||||||||||||||||
Interest Rate Swaps
|
$
|
(3,726
|
)
|
|
$
|
(2,153
|
)
|
|
$
|
3,058
|
|
|
$
|
(7,830
|
)
|
|
$
|
—
|
|
|
$
|
(9,263
|
)
|
|
$
|
(2,564
|
)
|
|
$
|
(9,263
|
)
|
(1)
|
In connection with the amendment of the Company’s senior unsecured credit facility discussed in Note 11,
two
interest rate swap agreements, with an aggregate notional amount of
$278.8 million
and maturity dates of
June 27, 2014
, were deemed to be ineffective and the Company reclassified
$2.6 million
of unrealized losses previously recorded in accumulated other comprehensive income into interest expense during the
nine
months ended
September 30, 2013
. The Company recorded a
$420,000
and
$920,000
increase in the fair value related to these swaps in interest expense during the
three and nine
months ended
September 30, 2013
, respectively. The remaining interest rate swaps were considered effective during the
nine
months ended
September 30, 2013
. As of September 30, 2012, an interest rate swap was designated as ineffective and the unrealized loss was reclassified from accumulated comprehensive income into interest expense as it related to one of the 2012 Held for Sale Properties and the Company terminated the swap when the property was sold.
|
|
|
|
During the Nine Months Ended September 30, 2013
|
|
|
||||||||||||||
|
Balance as of
December 31, 2012 |
|
Debt Issuance
and Assumptions
|
|
Repayments
|
|
Other
(1)
|
|
Balance as of
September 30, 2013 |
||||||||||
Fixed rate debt
(2)
|
$
|
2,311,541
|
|
|
$
|
275,088
|
|
|
$
|
(9,824
|
)
|
|
$
|
385
|
|
|
$
|
2,577,190
|
|
Variable rate debt
|
84,942
|
|
|
11,901
|
|
|
—
|
|
|
—
|
|
|
96,843
|
|
|||||
Construction facilities
|
27,758
|
|
|
6,932
|
|
|
(7,884
|
)
|
|
—
|
|
|
26,806
|
|
|||||
Credit facility
|
767,750
|
|
|
587,250
|
|
|
(285,000
|
)
|
|
—
|
|
|
1,070,000
|
|
|||||
Repurchase agreements
|
100,057
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,057
|
|
|||||
Total
(3)
|
$
|
3,292,048
|
|
|
$
|
881,171
|
|
|
$
|
(302,708
|
)
|
|
$
|
385
|
|
|
$
|
3,870,896
|
|
(1)
|
Represents fair value adjustment of assumed mortgage note payable, net of amortization.
|
(2)
|
Fixed rate debt included a loan obligation of
$34.3 million
to be assumed by the buyer related to the 2013 Held for Sale Property, which is included in liabilities related to real estate held for sale, net in the accompanying condensed consolidated unaudited balance sheets.
|
(3)
|
The table above does not include loan amounts associated with the Unconsolidated Joint Ventures of
$195.8 million
, of which
$10.2 million
is recourse to CCPT III OP. These loans mature on various dates ranging from
July 2015
to
July 2021
.
|
|
Nine Months Ended September 30,
|
||||||
|
2013
|
|
2012
|
||||
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
|
|
|
|
||||
Dividends declared and unpaid
|
$
|
28,720
|
|
|
$
|
25,418
|
|
Fair value of mortgage notes assumed in real estate acquisitions at date of assumption
|
$
|
10,223
|
|
|
$
|
24,000
|
|
Common stock issued through distribution reinvestment plan
|
$
|
74,395
|
|
|
$
|
124,964
|
|
Net unrealized gain on interest rate swaps
|
$
|
3,058
|
|
|
$
|
1,433
|
|
Unrealized (loss) gain on marketable securities
|
$
|
(10,091
|
)
|
|
$
|
43,038
|
|
Contingent consideration
|
$
|
237,481
|
|
|
$
|
6,494
|
|
Common stock issued as consideration related to the merger
|
$
|
90,660
|
|
|
$
|
—
|
|
Accrued deferred financing costs, construction and capital expenditures
|
$
|
741
|
|
|
$
|
3,397
|
|
Supplemental Cash Flow Disclosures:
|
|
|
|
||||
Interest paid, net of capitalized interest of $43 and $237, respectively
|
$
|
105,713
|
|
|
$
|
85,437
|
|
|
Three Months Ended September 30, 2013
|
||||||||||||||
|
CCPT IV
|
|
CCIT
|
|
INAV
|
|
Total
|
||||||||
Offering:
|
|
|
|
|
|
|
|
||||||||
Selling commission revenue
|
$
|
40,557
|
|
|
$
|
71,379
|
|
|
$
|
—
|
|
|
$
|
111,936
|
|
Selling commissions reallowance expense
|
$
|
40,557
|
|
|
$
|
71,379
|
|
|
$
|
—
|
|
|
$
|
111,936
|
|
Dealer manager fee revenue
|
$
|
11,723
|
|
|
$
|
21,246
|
|
|
$
|
67
|
|
|
$
|
33,036
|
|
Dealer manager fees reallowance expense
|
$
|
6,552
|
|
|
$
|
11,909
|
|
|
$
|
1
|
|
|
$
|
18,462
|
|
Other expense reimbursement revenue
|
$
|
11,827
|
|
|
$
|
15,996
|
|
|
$
|
69
|
|
|
$
|
27,892
|
|
|
Period from the Cole Holdings Merger Date to September 30, 2013
|
||||||||||||||
|
CCPT IV
|
|
CCIT
|
|
INAV
|
|
Total
|
||||||||
Offering:
|
|
|
|
|
|
|
|
||||||||
Selling commission revenue
|
$
|
54,924
|
|
|
$
|
90,407
|
|
|
$
|
—
|
|
|
$
|
145,331
|
|
Selling commissions reallowance expense
|
$
|
54,924
|
|
|
$
|
90,407
|
|
|
$
|
—
|
|
|
$
|
145,331
|
|
Dealer manager fee revenue
|
$
|
15,911
|
|
|
$
|
26,847
|
|
|
$
|
113
|
|
|
$
|
42,871
|
|
Dealer manager fees reallowance expense
|
$
|
8,849
|
|
|
$
|
15,178
|
|
|
$
|
2
|
|
|
$
|
24,029
|
|
Other expense reimbursement revenue
|
$
|
16,072
|
|
|
$
|
20,238
|
|
|
$
|
170
|
|
|
$
|
36,480
|
|
|
Three Months Ended September 30, 2013
|
||||||||||||||||||
|
CCPT II
(1)
|
|
CCPT IV
|
|
CCIT
|
|
Other
|
|
Total
|
||||||||||
Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisition fee revenue
|
$
|
—
|
|
|
$
|
7,257
|
|
|
$
|
9,626
|
|
|
$
|
—
|
|
|
$
|
16,883
|
|
Asset management fee revenue
|
$
|
411
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
661
|
|
Property management and leasing fee revenue
|
$
|
248
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
168
|
|
|
$
|
416
|
|
Operating expense reimbursement revenue
|
$
|
80
|
|
|
$
|
1,780
|
|
|
$
|
1,119
|
|
|
$
|
—
|
|
|
$
|
2,979
|
|
Advisory and performance fee revenue
|
$
|
—
|
|
|
$
|
2,650
|
|
|
$
|
2,154
|
|
|
$
|
324
|
|
|
$
|
5,128
|
|
|
Period from the Cole Holdings Merger Date to September 30, 2013
|
||||||||||||||||||
|
CCPT II
(1)
|
|
CCPT IV
|
|
CCIT
|
|
Other
|
|
Total
|
||||||||||
Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Acquisition fee revenue
|
$
|
—
|
|
|
$
|
17,853
|
|
|
$
|
20,390
|
|
|
$
|
149
|
|
|
$
|
38,392
|
|
Asset management fee revenue
|
$
|
2,559
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
486
|
|
|
$
|
3,045
|
|
Property management and leasing fee revenue
|
$
|
1,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
346
|
|
|
$
|
2,044
|
|
Operating expense reimbursement revenue
|
$
|
933
|
|
|
$
|
2,653
|
|
|
$
|
1,641
|
|
|
$
|
—
|
|
|
$
|
5,227
|
|
Advisory and performance fee revenue
|
$
|
—
|
|
|
$
|
4,447
|
|
|
$
|
3,338
|
|
|
$
|
399
|
|
|
$
|
8,184
|
|
|
|
% of Outstanding Shares Owned
|
|
Carrying Amount of Investment
|
|||
Unconsolidated Managed REIT
|
|
as of September 30, 2013
|
|
as of September 30, 2013
|
|||
CCPT
|
|
0.01
|
%
|
|
$
|
5
|
|
CCPT IV
|
|
0.02
|
%
|
|
147
|
|
|
CCIT
|
|
0.01
|
%
|
|
103
|
|
|
INAV
|
|
0.42
|
%
|
|
172
|
|
|
|
|
|
|
$
|
427
|
|
|
RSU Awards
|
|
PSU Awards
|
||||||||||
|
Shares
|
|
Weighted Average Grant Date Fair Value
(1)
|
|
Shares
|
|
Weighted Average Grant Date Fair Value
(2)
|
||||||
Non-vested at December 31, 2012
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Granted
|
2,283,744
|
|
|
$
|
10.56
|
|
|
591,929
|
|
|
$
|
7.04
|
|
Vested
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(6,450
|
)
|
|
10.56
|
|
|
—
|
|
|
—
|
|
||
Non-vested at September 30, 2013
|
2,277,294
|
|
|
$
|
10.56
|
|
|
591,929
|
|
|
$
|
7.04
|
|
(1)
|
The grant date fair values of the RSUs were based on the closing price reported for the Company’s common stock on the NYSE on the respective grant date. Certain RSUs are subject to a two-year restriction period, and, therefore, the fair value for such RSUs was adjusted for a lack of marketability discount of
15%
.
|
(2)
|
The grant date fair values for the PSUs were determined using a Monte Carlo simulation model on a risk-neutral basis. The key assumptions used in the model were primarily based on available Company data and data of companies with similar operations to the Company and included: (1) an expected volatility rate of
32%
; (2) a dividend yield of
6%
; (3) a risk-free interest rate of
0.64%
; and (4) a lack of marketability discount of
15%
, as applicable.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to the Company
|
|
$
|
24,189
|
|
|
$
|
18,567
|
|
|
$
|
93,323
|
|
|
$
|
77,727
|
|
Dividends paid and declared on Escrow Shares
|
|
(764
|
)
|
|
—
|
|
|
(1,369
|
)
|
|
—
|
|
||||
Net income - basic and diluted
|
|
$
|
23,425
|
|
|
$
|
18,567
|
|
|
$
|
91,954
|
|
|
$
|
77,727
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding - basic
|
|
479,370,020
|
|
|
476,353,149
|
|
|
482,720,629
|
|
|
457,996,321
|
|
||||
Effect of dilutive securities
|
|
16,109,936
|
|
|
—
|
|
|
6,568,232
|
|
|
—
|
|
||||
Weighted average number of common shares outstanding - diluted
|
|
495,479,956
|
|
|
476,353,149
|
|
|
489,288,861
|
|
|
457,996,321
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share attributable to the Company
|
|
$
|
0.05
|
|
|
$
|
0.04
|
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
Diluted earnings per common share:
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share attributable to the Company
|
|
$
|
0.05
|
|
|
$
|
0.04
|
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
September 30,
|
||||
|
2013
|
|
2012
|
||
Number of commercial properties
(1)
|
1,026
|
|
|
968
|
|
Approximate rentable square feet
(2)
|
44.8 million
|
|
|
41.4 million
|
|
Percentage of rentable square feet leased
|
99
|
%
|
|
99
|
%
|
(1)
|
Excludes properties owned through the Unconsolidated Joint Ventures.
|
(2)
|
Includes square feet of the buildings on land that are subject to ground leases.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Commercial properties acquired
(1)
|
|
17
|
|
|
|
42
|
|
|
|
32
|
|
|
|
287
|
|
Approximate purchase price of acquired properties
|
$
|
120.0 million
|
|
|
$
|
371.0 million
|
|
|
$
|
410.7 million
|
|
|
$
|
1.5 billion
|
|
Commercial properties disposed of
|
|
5
|
|
|
|
—
|
|
|
|
20
|
|
|
|
12
|
|
Approximate sales price of disposed properties
|
$
|
13.4 million
|
|
|
$
|
—
|
|
|
$
|
100.1 million
|
|
|
$
|
69.4 million
|
|
(1)
|
Excludes properties owned through the Unconsolidated Joint Ventures.
|
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|||||||||||
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
Same store base rental revenue
(1)
|
|
$
|
113,823
|
|
|
$
|
111,821
|
|
|
$
|
2,002
|
|
|
1.8
|
%
|
Same store other rental revenue
(1)
|
|
5,721
|
|
|
7,190
|
|
|
(1,469
|
)
|
|
(20.4
|
)%
|
|||
Total same store rental revenue
|
|
119,544
|
|
|
119,011
|
|
|
533
|
|
|
0.4
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Rental and other property income from income-producing properties acquired subsequent to June 30, 2012 and properties sold prior to September 30, 2013
|
|
25,016
|
|
|
2,094
|
|
|
22,922
|
|
|
1,094.7
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Total rental and other property income
|
|
$
|
144,560
|
|
|
$
|
121,105
|
|
|
$
|
23,455
|
|
|
19.4
|
%
|
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
|||||||||||
|
|
2013
|
|
2012
|
|
$ Change
|
|
% Change
|
|||||||
Same store base rental revenue
(1)
|
|
$
|
280,199
|
|
|
$
|
277,098
|
|
|
$
|
3,101
|
|
|
1.1
|
%
|
Same store other rental revenue
(1)
|
|
13,455
|
|
|
15,782
|
|
|
(2,327
|
)
|
|
(14.7
|
)%
|
|||
Total same store rental revenue
|
|
293,654
|
|
|
292,880
|
|
|
774
|
|
|
0.3
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Rental and other property income from income-producing properties acquired subsequent to December 31, 2011 and properties sold prior to September 30, 2013
|
|
130,600
|
|
|
39,057
|
|
|
91,543
|
|
|
234.4
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Total rental and other property income
|
|
$
|
424,254
|
|
|
$
|
331,937
|
|
|
$
|
92,317
|
|
|
27.8
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
NET INCOME ATTRIBUTABLE TO THE COMPANY
|
$
|
24,189
|
|
|
$
|
18,567
|
|
|
$
|
93,323
|
|
|
$
|
77,727
|
|
Depreciation and amortization of real property
|
50,360
|
|
|
44,380
|
|
|
148,728
|
|
|
122,077
|
|
||||
Depreciation and amortization of real estate assets in unconsolidated joint ventures
|
1,634
|
|
|
1,549
|
|
|
5,105
|
|
|
3,153
|
|
||||
Net gain on sale and condemnation of real estate assets
|
(3,078
|
)
|
|
—
|
|
|
(21,962
|
)
|
|
(15,445
|
)
|
||||
Funds from operations (FFO)
|
73,105
|
|
|
64,496
|
|
|
225,194
|
|
|
187,512
|
|
||||
Merger and acquisition related expenses
|
25,237
|
|
|
13,612
|
|
|
52,660
|
|
|
46,431
|
|
||||
Merger related stock-based compensation
|
13,329
|
|
|
—
|
|
|
23,607
|
|
|
—
|
|
||||
Equity plans stock-based compensation
|
1,831
|
|
|
—
|
|
|
1,831
|
|
|
—
|
|
||||
Listing and tender offer expenses
|
1,949
|
|
|
—
|
|
|
4,803
|
|
|
—
|
|
||||
Amortization of deferred financing costs
|
2,828
|
|
|
3,829
|
|
|
10,535
|
|
|
10,451
|
|
||||
Straight-line rent adjustments
|
(8,460
|
)
|
|
(8,937
|
)
|
|
(27,029
|
)
|
|
(24,215
|
)
|
||||
Above/below market lease intangibles amortization, net
|
692
|
|
|
536
|
|
|
2,293
|
|
|
2,250
|
|
||||
(Gain) loss on ineffective derivatives and extinguishment of debt
|
(420
|
)
|
|
9,342
|
|
|
7,362
|
|
|
9,468
|
|
||||
Loss on the sale of marketable securities
|
—
|
|
|
—
|
|
|
1,331
|
|
|
—
|
|
||||
Other amortization (accretion), net
(1)
|
2,501
|
|
|
(1,350
|
)
|
|
5,678
|
|
|
(2,706
|
)
|
||||
Other gains
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,744
|
)
|
||||
Proportionate share of adjustments for unconsolidated joint ventures
|
180
|
|
|
(888
|
)
|
|
331
|
|
|
(1,228
|
)
|
||||
Adjusted funds from operations (AFFO)
|
$
|
112,772
|
|
|
$
|
80,640
|
|
|
$
|
308,596
|
|
|
$
|
225,219
|
|
(1)
|
Primarily consists of CMBS accretion and amortization of intangible assets.
|
(2)
|
During the
nine
months ended
September 30, 2012
, a purchase agreement was terminated and the seller paid us a breakage fee and reimbursed us for certain underwriting expenses paid. We recorded these proceeds, net of underwriting expenses and advisor reimbursements, of
$2.7 million
as other income.
|
|
Payments due by period
(1) (2)
|
||||||||||||||||||
|
Total
|
|
Less Than 1
Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than 5
Years
(3)
|
||||||||||
Principal payments - fixed rate debt
(4)(5)(6)
|
$
|
2,577,746
|
|
|
$
|
2,360
|
|
|
$
|
337,260
|
|
|
$
|
313,116
|
|
|
$
|
1,925,010
|
|
Interest payments - fixed rate debt
(6)
|
795,289
|
|
|
123,442
|
|
|
231,508
|
|
|
196,210
|
|
|
244,129
|
|
|||||
Principal payments - variable rate debt
|
96,843
|
|
|
—
|
|
|
54,781
|
|
|
34,312
|
|
|
7,750
|
|
|||||
Interest payments - variable rate debt
(7)
|
10,939
|
|
|
2,975
|
|
|
4,305
|
|
|
3,277
|
|
|
382
|
|
|||||
Principal payments - construction facilities
|
26,806
|
|
|
26,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments - construction facilities
|
138
|
|
|
138
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Principal payments - credit facility
|
1,070,000
|
|
|
—
|
|
|
—
|
|
|
1,070,000
|
|
|
—
|
|
|||||
Interest payments - credit facility
(8)
|
142,185
|
|
|
31,372
|
|
|
66,272
|
|
|
44,541
|
|
|
—
|
|
|||||
Principal payments - repurchase agreements
(9)
|
100,057
|
|
|
100,057
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest payments - repurchase agreements
|
306
|
|
|
306
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
4,820,309
|
|
|
$
|
287,456
|
|
|
$
|
694,126
|
|
|
$
|
1,661,456
|
|
|
$
|
2,177,271
|
|
(1)
|
As of
September 30, 2013
, we had
$472.8 million
of variable rate debt fixed through the use of interest rate swaps. We used the rates fixed under our swap agreements to calculate the debt payment obligations in future periods.
|
(2)
|
The table does not include loan amounts associated with the Unconsolidated Joint Ventures of
$195.8 million
, of which
$10.2 million
is recourse to CCPT III OP. These loans mature on various dates ranging from
July 2015
to
July 2021
.
|
(3)
|
Assumes we accept the interest rate that one lender may reset on February 1, 2015 related to a mortgage note payable of $32.0 million.
|
(4)
|
Principal payment amounts reflect actual payments based on the face amount of notes payable secured by our wholly-owned properties and our Consolidated Joint Ventures. As of
September 30, 2013
, the fair value adjustment, net of amortization, of mortgage notes assumed was
$556,000
.
|
(5)
|
Amortizing principal payments are included in the year the payments will be made.
|
(6)
|
Includes a loan obligation of
$34.3 million
to be assumed by the buyer related to the 2013 Held for Sale Property, which matures in
February 2020
.
|
(7)
|
Rates ranging from
2.43%
to
3.43%
were used to calculate the variable debt payment obligations in future periods. These were the rates effective as of
September 30, 2013
.
|
(8)
|
Payment obligations for the Term Loan outstanding under the Credit Facility are based on an interest rate of 3.30%, which is the fixed rate under the executed swap agreement that had the effect of fixing the variable interest rate per annum through the maturity date in June 2018.
|
(9)
|
We may elect to renew the terms under the Repurchase Agreements for periods of 90 days until the respective CMBS, which are held as collateral, mature.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
having to pay certain costs relating to the proposed ARCP Merger, such as legal, accounting and financial advisor fees; and
|
•
|
diverting management attention and resources from operational matters and other strategic opportunities toward implementing the ARCP Merger.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
|
|
Maximum Dollar Value of
Shares that May Yet Be
Purchased Under the
Plans or Programs
|
||||||
July 1, 2013 - July 31, 2013
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
500,000,000
|
|
August 1, 2013 - August 31, 2013
|
|
20,443,370
|
|
|
$
|
12.25
|
|
|
—
|
|
|
$
|
250,000,000
|
|
September 1, 2013 - September 30, 2013
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
250,000,000
|
|
Total
|
|
20,443,370
|
|
|
|
|
—
|
|
|
$
|
250,000,000
|
|
(1)
|
A description of the details of each of our plans or programs is included in the narrative preceding this table.
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
|
|
Cole Real Estate Investments, Inc.
(Registrant)
|
|
|
|
|
|
By:
|
|
/s/ Simon J. Misselbrook
|
|
Name:
|
|
Simon J. Misselbrook
|
|
Title:
|
|
Senior Vice President of Accounting
(Principal Accounting Officer)
|
Exhibit No.
|
|
Description
|
10.1*
|
|
Form of Non-Employee Director Restricted Share Unit Award Agreement.
|
31.1*
|
|
Certification of the Principal Executive Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
|
Certification of the Principal Financial Officer of the Company pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1**
|
|
Certification of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
*
|
Filed herewith.
|
**
|
In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
|
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