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ACQUISITIONS
 12 Months Ended
Dec. 31, 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 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. 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, 2021214,797,869 
Exchange ratio0.623 
Company common shares issued for outstanding RPAI common stock133,814,066 
Company common shares issued for RPAI restricted stock units1,117,399 
Total Company common shares issued134,931,465 
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 years ended December 31, 2022 and 2021, the Company incurred $0.9 million and $86.5 million of merger and acquisition costs, respectively, consisting primarily of professional fees and technology costs in 2022 and fairness opinion, severance charges, and legal, professional and data migration costs in 2021, 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 loss attributable to common shareholders” in the accompanying consolidated statements of operations and comprehensive income include revenues from the RPAI portfolio of $94.9 million and net loss of $22.8 million for the period from October 22, 2021 through December 31, 2021, which includes $74.7 million of depreciation and amortization, as a result of the Merger during the year ended December 31, 2021.
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 used 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$4,424,096 
Acquired lease intangible assets536,342 
Cash, accounts receivable and other assets84,632 
Total assets acquired5,045,070 
Mortgage and other indebtedness, net(1,848,476)
Accounts payable, other liabilities, tenant security deposits and prepaid rent(176,391)
In-place lease liabilities(168,371)
Noncontrolling interests(4,463)
Total liabilities assumed(2,197,701)
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)
Land10.2
Building18.8
Tenant improvements6.7
In-place lease intangibles5.5
Above-market leases5.7
Below-market leases (including below-market option periods)20.5
Fair market value of debt adjustments6.8
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 years ended December 31, 2021 and 2020, adjusted to give effect for the properties assumed through the Merger as if they were acquired as of January 1, 2020. 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, except per share data).
Year Ended December 31,
20212020
Rental income$740,954 $683,093 
Net income (loss)$21,283 $(109,775)
Net income (loss) attributable to common shareholders$20,535 $(107,341)
Net income (loss) attributable to common shareholders per common share:
Basic(1)
$0.09 $(0.49)
Diluted(1)
$0.09 $(0.49)
(1)The pro forma earnings for the year ended December 31, 2021 were adjusted to exclude $86.5 million of merger costs incurred while the pro forma earnings for the year ended December 31, 2020 were adjusted to include these costs.
Supplemental Schedule of Non-Cash Investing and Financing Activities Related to the Merger
The following table summarizes the Merger-related non-cash investing and financing activities for the year ended December 31, 2021 (in thousands):
Year Ended December 31, 2021
Investment properties$4,439,387 
Acquired lease intangible assets$524,058 
Mortgage and other indebtedness, net$(1,848,476)
In-place lease liabilities$(171,378)
Noncontrolling interests$(4,463)
Other assets and liabilities, net(1)
$(106,751)
Company common shares issued in exchange for RPAI common stock$(2,847,369)
(1)Includes lease liabilities arising from obtaining right-of-use assets of $41,086, which was determined using an estimate of our incremental borrowing rate that was specific to each lease based upon the term and underlying asset with a weighted average incremental borrowing rate of 5.4%.
Asset Acquisitions
The Company closed on the following asset acquisitions during the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):
DateProperty NameMetropolitan
Statistical Area (MSA)		Property TypeSquare
Footage		Acquisition
Price
February 16, 2022Pebble MarketplaceLas VegasMulti-tenant retail85,796 $44,100 
April 13, 2022MacArthur CrossingDallasTwo-tenant building56,077 21,920 
July 15, 2022Palms PlazaMiamiMulti-tenant retail68,976 35,750 
210,849 $101,770 
December 22, 2021Nora Plaza ShopsIndianapolis, INMulti-tenant
retail outparcel		23,722 $13,500 
December 28, 2020Eastgate CrossingDurham-Chapel Hill, NCMulti-tenant retail156,275 $65,479 
The above acquisitions were funded using a combination of available cash on hand and proceeds from the Company’s unsecured revolving line of credit. The fair value of the real estate and other assets acquired were primarily determined using the income approach, which required us to make assumptions about market leasing rates, tenant-related costs, discount rates, and disposal rates. The estimates of fair value primarily relied upon Level 2 and Level 3 inputs, as previously defined.
The following table summarizes the fair value of assets acquired and liabilities assumed for the asset acquisitions completed during the years ended December 31, 2022, 2021 and 2020 (in thousands):
Year Ended December 31,
202220212020
Investment properties, net$99,096 $13,488 $63,570 
Lease-related intangible assets, net(1)
5,223 304 2,254 
Other assets11 — — 
Total acquired assets104,330 13,792 65,824 
Mortgage payable— 3,578 — 
Accounts payable and accrued expenses1,140 100 280 
Deferred revenue and other liabilities2,855 189 246 
Total assumed liabilities3,995 3,867 526 
Fair value of net assets acquired$100,335 $9,925 $65,298 
(1)The weighted average remaining life of leases at the acquired properties is approximately 6.7 years, 5.3 years and 3.2 years for asset acquisitions completed during the years ended December 31, 2022, 2021 and 2020, respectively.
The range of the most significant Level 3 assumptions used in determining the value of the real estate and related assets acquired through asset acquisitions are as follows:
202220212020
Net rental rate per square foot – Anchors
$20.50 to $40.00
N/A to N/A
$22.50 to $27.50
Net rental rate per square foot – Small Shops
$24.00 to $65.00
$31.50 to $45.00
$15.00 to $65.00
Discount rate
5.75% to 7.25%
9.0%9.0%
The results of operations for each of the properties acquired through asset acquisitions during the years ended December 31, 2022, 2021 and 2020 have been included in operations since their respective dates of acquisition.