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ACQUISITIONS | 9 Months Ended
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Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS | ACQUISITIONS RPAI Merger On October 22, 2021, we completed a Merger with RPAI pursuant to which RPAI merged with and into Merger Sub, with the Company continuing as the surviving public company. Immediately following the closing of the Merger, Merger Sub merged with and into the Operating Partnership so that all of the assets and liabilities of the Company continue to be held at or below the Operating Partnership level. The aggregate value of the Merger consideration paid or payable to former holders of RPAI common stock was approximately $2.8 billion, excluding the value of RPAI restricted stock units that vested at closing and certain restricted share awards assumed by the Company at closing. The total purchase price was calculated based on the closing price of the Company’s common stock on October 21, 2021, the last business day prior to the effective time of the Merger, which was $21.18 per share. At the effective time of the Merger, each share of RPAI common stock issued and outstanding immediately prior to the effective time was converted into the right to receive 0.623 newly issued Company common shares plus cash in lieu of fractional Company shares. In addition, holders of (i) options to purchase shares of RPAI common stock, (ii) certain awards of restricted shares of RPAI common stock (as agreed in accordance with the Merger Agreement), and (iii) restricted stock units representing the right to vest in and be issued shares of RPAI common stock became entitled to receive cash and/or Company common shares in accordance with the terms of the Merger Agreement. The Company assumed certain existing awards of restricted shares of RPAI common stock, each of which were converted into 0.623 awards of restricted Company common shares plus cash in lieu of fractional Company shares in accordance with the Merger Agreement. In connection with the Merger, the Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company. The number of RPAI common stock outstanding as of October 21, 2021 converted to shares of the Company’s common stock was determined as follows:
RPAI common stock outstanding as of October 21, 2021 | 214,797,869 |
Exchange ratio | 0.623 |
Company common shares issued for outstanding RPAI common stock | 133,814,066 |
Company common shares issued for RPAI restricted stock units | 1,117,399 |
Total Company common shares issued | 134,931,465 |
The following table presents the purchase price and total value of equity consideration paid by the Company at the close of the Merger:
(in thousands, except share price) | Price of Company common shares |  | Equity Consideration Given (Company common shares issued) |  | Total Value of Stock Consideration(1)
As of October 21, 2021 | $ | 21.18 |  |  | 134,931 |  |  | $ | 2,847,369 |
(1)The total value of stock consideration is the total of the common shares issued multiplied by the closing price of the Company’s common stock on October 21, 2021 excluding the value of certain RPAI restricted stock that vested at the closing of the Merger and share awards assumed by the Company at the closing of the Merger. As a result of the Merger, the Company acquired 100 operating retail properties and five development projects under construction along with multiple parcels of entitled land for future value creation. During the nine months ended September 30, 2022, the Company incurred $1.0 million of merger and acquisition costs consisting primarily of professional fees and technology costs, which are recorded within “Merger and acquisition costs” in the accompanying consolidated statements of operations and comprehensive income. In addition, the Company assumed approximately $1.8 billion of debt in connection with the Merger. “Rental income” and “Net income attributable to common shareholders” in the accompanying consolidated statements of operations and comprehensive income include revenues from the RPAI portfolio of $124.7 million and $375.0 million and net loss of $7.1 million and $17.3 million for the three months and nine months ended September 30, 2022, respectively, which includes $84.0 million and $265.2 million of depreciation and amortization, respectively, as a result of the Merger. Purchase Price Allocation In accordance with ASC 805-10, Business Combinations, the Company accounted for the Merger as a business combination using the acquisition method of accounting. Based on the value of the common shares issued, the total fair value of the assets acquired and liabilities assumed in the Merger was $2.8 billion as of October 22, 2021, the date of the Merger. The Company used the following valuation methodologies, inputs and assumptions to estimate the fair value of the assets acquired and liabilities assumed: •Investment properties: The Company estimated the fair value of the buildings on an as-if-vacant basis using either a direct capitalization method or a discounted cash flow analysis. Comparable market data, real estate tax assessments and independent appraisals were used in estimating the fair value of the land acquired. These valuation methodologies are based on Level 2 and Level 3 inputs in the fair value hierarchy, such as estimates of future income growth, capitalization rates and cash flow projections at the respective properties. •Acquired lease intangible assets: The Company estimated the fair value of its above-market and below-market in-place leases based on the present value (using a discount rate that reflects the risk associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over the remaining non-cancelable term of the leases. Any below-market renewal options are also considered in the in-place lease values. This valuation methodology is based on Level 3 inputs in the fair value hierarchy. •In-place lease liabilities: The Company estimated the fair value of its in-place leases using independent and internal sources, which are methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant. This valuation methodology is based on Level 3 inputs in the fair value hierarchy. •Mortgage and other indebtedness: The Company estimated the fair value of the secured and unsecured debt assumed, including related derivative instruments, using third party and independent sources for our estimates. Any difference between the fair value and stated value of the assumed debt is recorded as a discount or premium and amortized over the remaining term of the loan using the interest method. This valuation methodology is based on Level 2 and Level 3 inputs in the fair value hierarchy. The range of the most significant Level 3 assumptions utilized in determining the value of the real estate and related assets acquired through the Merger with RPAI are as follows:
| Range of Assumptions
Net rental rate per square foot – Anchors | $4.00 to $45.00
Net rental rate per square foot – Small Shops | $7.00 to $140.00
Capitalization rate | 5.50% to 12.00%
The following table summarizes the final purchase price allocation, including the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed:
($ in thousands) | Purchase Price Allocation
Investment properties | $ | 4,425,254 |
Acquired lease intangible assets | 535,465 |
Cash, accounts receivable and other assets | 84,632 |
Total assets acquired | 5,045,351 |
Mortgage and other indebtedness, net | (1,848,476) |
Accounts payable, other liabilities, tenant security deposits and prepaid rent | (176,391) |
In-place lease liabilities | (168,652) |
Noncontrolling interests | (4,463) |
Total liabilities assumed | (2,197,982) |
Total purchase price | $ | 2,847,369 |
The following table details the weighted average amortization periods, in years, of the purchase price allocated to real estate and related intangible assets and liabilities acquired arising from the Merger:
| Weighted Average Amortization Period (in years)
Land | 10.2
Building | 18.8
Tenant improvements | 6.7
In-place lease intangibles | 5.5
Above-market leases | 5.7
Below-market leases (including below-market option periods) | 20.5
Fair market value of debt adjustments | 6.8
Pro Forma Financial Information (unaudited) The pro forma financial information set forth below is based upon the Company’s historical consolidated statements of operations for the three and nine months ended September 30, 2021, adjusted to give effect for the properties assumed through the Merger as if they were acquired as of January 1, 2021. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it purport to represent the results of income for future periods.
($ in thousands) | Three Months Ended September 30, 2021 |  | Nine Months Ended September 30, 2021
Rental income | $ | 190,908 |  |  | $ | 560,423 |
Net loss | $ | (38,786) |  |  | $ | (87,551) |
Net loss attributable to common shareholders | $ | (38,358) |  |  | $ | (86,571) |
Net loss attributable to common shareholders per common share: |  |  |
Basic | $ | (0.17) |  |  | $ | (0.39) |
Diluted | $ | (0.17) |  |  | $ | (0.39) |
Asset Acquisitions The Company closed on the following asset acquisitions during the nine months ended September 30, 2022:
Date |  | Property Name |  | Metropolitan Statistical Area (MSA) |  | Property Type |  | Square Footage |  | Acquisition Price
February 16, 2022 |  | Pebble Marketplace |  | Las Vegas |  | Multi-tenant retail |  | 85,796 |  |  | $ | 44,100 |
April 13, 2022 |  | MacArthur Crossing |  | Dallas |  | Two-tenant building |  | 56,077 |  |  | 21,920 |
July 15, 2022 |  | Palms Plaza |  | Miami |  | Multi-tenant retail |  | 68,976 |  |  | 35,750 |
|  |  |  |  |  |  |  | 210,849 |  |  | $ | 101,770 |
The above acquisitions were funded using a combination of available cash on hand and proceeds from the Company’s unsecured revolving line of credit. Substantially all of the purchase price was allocated to investment properties. The Company did not acquire any properties during the nine months ended September 30, 2021.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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