Recently Issued
Accounting Standards
Debt with Conversion and Other
Options. In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06
related to simplifying the accounting for convertible instruments
by removing certain separation models for convertible instruments.
Among other things, the amendments in the update also provide for
improvements in the consistency in EPS calculations by amending the
guidance by requiring that an entity use the if-converted method
for convertible instruments. The amendments in ASU 2020-06 are
effective for reporting periods beginning after December 15, 2021.
The Company intends to adopt ASU 2020-06 commencing January 1,
2022, at which time, the Company’s diluted EPS calculation will
include the dilutive impact of the 2025 Notes (hereinafter
defined), irrespective of intended cash settlement. Further, the
Company elects, upon adoption, to utilize the modified
retrospective approach, negating the required restatement of EPS
for periods prior to adoption.
ASC Topic 326, Financial
Instruments-Credit Losses. In June 2016, the FASB issued ASU
2016-13, which amends its guidance on the measurement of credit
losses on financial instruments. The amendments in this update are
effective for annual reporting periods beginning after December 31,
2019. ASU 2016-13 affects entities holding financial assets that
are not accounted for at fair value through net income, including
but not limited to, loans, trade receivables, and net investments
in leases. The Company adopted the changes to FASB ASC 326,
Financial Instruments-Credit
Losses on January 1, 2020. The Company’s evaluation of current
expected credit losses (“CECL”) resulted in a reserve of $0.3
million on the Company’s commercial loan and master lease
investments portfolio during the three months ended March 31, 2020.
See Note 5 “Commercial Loan and Master Lease Investments” for
further information.
Reclassifications
Certain items in the consolidated balance sheet as of December 31,
2020 have been reclassified to conform to the presentation as of
September 30, 2021. Specifically, in the first quarter of 2021, the
Company reclassified deferred financing costs incurred in
connection with its Credit Facility (as further described in Note
17, “Long-Term Debt”), net of accumulated amortization, as a
component of other assets on the accompanying consolidated balance
sheet. Accordingly, deferred financing costs of $1.2 million, net
of accumulated amortization of $0.5 million, were reclassified from
long-term debt to other assets as of December 31, 2020.
Cash and Cash
Equivalents
Cash and cash equivalents includes cash on hand, bank demand
accounts, and money market accounts having original maturities of
90 days or less. The Company’s bank balances as of September 30,
2021 include certain amounts over the Federal Deposit Insurance
Corporation limits.
Restricted
Cash
Restricted cash totaled $68.5 million at September 30, 2021, of
which $67.8 million is being held in various escrow accounts to be
reinvested through the like-kind exchange structure into other
income properties, $0.6 million is being held in an escrow account
in connection with the Mitigation Bank as required by the
applicable state and federal permitting authorities, and $0.1
million is being held in an escrow account in connection with the
sale of a ground lease located in Daytona Beach, Florida.
Derivative
Financial Instruments and Hedging Activity
Interest Rate Swaps. The Company
accounts for its cash flow hedging derivatives in accordance with
FASB ASC Topic 815-20, Derivatives
and Hedging. Depending upon the hedge’s value at each balance
sheet date, the derivatives are included in either other assets or
accrued and other liabilities on the consolidated balance sheet at
its fair value. On the date each interest rate swap was entered
into, the Company designated the derivatives as a hedge of the
variability of cash flows to be paid related to the recognized
long-term debt liabilities.
The Company documented the relationship between the hedging
instruments and the hedged item, as well as its risk-management
objective and strategy for undertaking the hedge transactions. At
the hedges’ inception, the Company formally assessed whether the
derivatives that are used in hedging the transactions are highly
effective in offsetting changes in cash flows of the hedged items,
and we will continue to do so on an ongoing basis. As the terms of
each interest rate