2017 Q3 Form 10-Q Financial Statement

#000156792517000168 Filed on November 09, 2017

View on sec.gov

Income Statement

Concept 2017 Q3 2016 Q3
Revenue $36.21M $13.59M
YoY Change 166.33% 97.47%
Cost Of Revenue
YoY Change
Gross Profit
YoY Change
Gross Profit Margin
Selling, General & Admin
YoY Change
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization
YoY Change
% of Gross Profit
Operating Expenses $23.98M $10.46M
YoY Change 129.25% 29.09%
Operating Profit $12.23M $3.134M
YoY Change 290.08% -357.1%
Interest Expense -$6.786M -$626.0K
YoY Change 984.03% -215.5%
% of Operating Profit -55.51% -19.97%
Other Income/Expense, Net
YoY Change
Pretax Income
YoY Change
Income Tax
% Of Pretax Income
Net Earnings $5.439M $2.508M
YoY Change 116.87% -242.42%
Net Earnings / Revenue 15.02% 18.45%
Basic Earnings Per Share $0.05 $0.03
Diluted Earnings Per Share $0.05 $0.03
COMMON SHARES
Basic Shares Outstanding 105.4M shares 71.85M shares
Diluted Shares Outstanding 105.4M shares 71.87M shares

Balance Sheet

Concept 2017 Q3 2016 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments
YoY Change
Cash & Equivalents $74.49M $49.09M
Short-Term Investments
Other Short-Term Assets
YoY Change
Inventory
Prepaid Expenses
Receivables
Other Receivables
Total Short-Term Assets
YoY Change
LONG-TERM ASSETS
Property, Plant & Equipment
YoY Change
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets
YoY Change
Total Long-Term Assets
YoY Change
TOTAL ASSETS
Total Short-Term Assets
Total Long-Term Assets
Total Assets $1.586B $770.9M
YoY Change 105.75% 91.2%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable
YoY Change
Accrued Expenses
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities
YoY Change
LONG-TERM LIABILITIES
Long-Term Debt
YoY Change
Other Long-Term Liabilities
YoY Change
Total Long-Term Liabilities
YoY Change
TOTAL LIABILITIES
Total Short-Term Liabilities
Total Long-Term Liabilities
Total Liabilities $693.1M $160.5M
YoY Change 331.96% 104.93%
SHAREHOLDERS EQUITY
Retained Earnings
YoY Change
Common Stock $1.122M $753.0K
YoY Change 49.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $893.0M $610.4M
YoY Change
Total Liabilities & Shareholders Equity $1.586B $770.9M
YoY Change 105.75% 91.2%

Cashflow Statement

Concept 2017 Q3 2016 Q3
OPERATING ACTIVITIES
Net Income $5.439M $2.508M
YoY Change 116.87% -242.42%
Depreciation, Depletion And Amortization
YoY Change
Cash From Operating Activities
YoY Change
INVESTING ACTIVITIES
Capital Expenditures
YoY Change
Acquisitions
YoY Change
Other Investing Activities
YoY Change
Cash From Investing Activities
YoY Change
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities
YoY Change
NET CHANGE
Cash From Operating Activities
Cash From Investing Activities
Cash From Financing Activities
Net Change In Cash
YoY Change
FREE CASH FLOW
Cash From Operating Activities
Capital Expenditures
Free Cash Flow
YoY Change

Facts In Submission

Frame Concept Type Concept / XBRL Key Value Unit
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cik0001567925 Additions To Real Estate Held For Investment And Capital Improvements
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cik0001567925 Adjustmentsto Additional Paidin Capital Distributionand Servicing Fees
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cik0001567925 Distributionand Servicing Fees Incurred But Not Yet Paid
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cik0001567925 Number Of Notes Payable During Period
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CY2017Q3 cik0001567925 Number Of Real Estate Investments
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CY2017Q3 cik0001567925 Numberof Micropolitan Statistical Areas In Which Company Owns Rental Property
NumberofMicropolitanStatisticalAreasInWhichCompanyOwnsRentalProperty
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cik0001567925 Paymentsfor Capitalized Acquisition Costsand Fees Prior Acquisition
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cik0001567925 Paymentsfor Capitalized Acquisition Costsand Fees Prior Acquisition
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cik0001567925 Period Of Notice Required For Changes To Share Repurchase Program
PeriodOfNoticeRequiredForChangesToShareRepurchaseProgram
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cik0001567925 Share Repurchase Program Percentageof Outstanding Common Stock Maximum
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dei Amendment Flag
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dei Current Fiscal Year End Date
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dei Document Fiscal Period Focus
DocumentFiscalPeriodFocus
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dei Document Fiscal Year Focus
DocumentFiscalYearFocus
2017
dei Document Period End Date
DocumentPeriodEndDate
2017-09-30
dei Document Type
DocumentType
10-Q
dei Entity Central Index Key
EntityCentralIndexKey
0001567925
dei Entity Filer Category
EntityFilerCategory
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dei Entity Registrant Name
EntityRegistrantName
Carter Validus Mission Critical REIT II, Inc.
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us-gaap Adjustments To Additional Paid In Capital Stock Issued Issuance Costs
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us-gaap Earnings Per Share Basic
EarningsPerShareBasic
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CY2016Q3 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
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us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.09
CY2017Q3 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
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us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
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FiniteLivedIntangibleAssetsAccumulatedAmortization
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CY2017Q3 us-gaap Finite Lived Intangible Assets Net
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CY2016Q3 us-gaap Gain Loss On Interest Rate Cash Flow Hedge Ineffectiveness
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71000 USD
us-gaap Gain Loss On Interest Rate Cash Flow Hedge Ineffectiveness
GainLossOnInterestRateCashFlowHedgeIneffectiveness
49000 USD
CY2017Q3 us-gaap Gain Loss On Interest Rate Cash Flow Hedge Ineffectiveness
GainLossOnInterestRateCashFlowHedgeIneffectiveness
14000 USD
us-gaap Gain Loss On Interest Rate Cash Flow Hedge Ineffectiveness
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16000 USD
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us-gaap General And Administrative Expense
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us-gaap General And Administrative Expense
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3199000 USD
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us-gaap Increase Decrease In Accounts Payable And Accrued Liabilities
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us-gaap Increase Decrease In Due To Affiliates
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us-gaap Increase Decrease In Other Operating Assets
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us-gaap Interest Costs Capitalized
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us-gaap Interest Costs Capitalized
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us-gaap Interest Income Expense Nonoperating Net
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us-gaap Operating Expenses
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CY2017Q3 us-gaap Operating Leases Future Minimum Payments Due In Three Years
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CY2017Q3 us-gaap Operating Leases Future Minimum Payments Due Thereafter
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us-gaap Operating Leases Income Statement Lease Revenue
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us-gaap Operating Leases Income Statement Lease Revenue
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us-gaap Other Comprehensive Income Loss Derivatives Qualifying As Hedges Net Of Tax
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CY2017Q3 us-gaap Other Comprehensive Income Loss Derivatives Qualifying As Hedges Net Of Tax
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us-gaap Other Comprehensive Income Loss Derivatives Qualifying As Hedges Net Of Tax
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us-gaap Other Comprehensive Income Loss Net Of Tax
OtherComprehensiveIncomeLossNetOfTax
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CY2016Q3 us-gaap Other Comprehensive Income Loss Net Of Tax Portion Attributable To Parent
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us-gaap Other Comprehensive Income Loss Net Of Tax Portion Attributable To Parent
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CY2017Q3 us-gaap Other Comprehensive Income Loss Net Of Tax Portion Attributable To Parent
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219000 USD
us-gaap Other Comprehensive Income Loss Net Of Tax Portion Attributable To Parent
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281000 USD
us-gaap Payments For Capital Improvements
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us-gaap Payments For Capital Improvements
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us-gaap Payments For Proceeds From Deposits On Real Estate Acquisitions
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5287000 USD
us-gaap Payments For Proceeds From Deposits On Real Estate Acquisitions
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37000 USD
us-gaap Payments For Repurchase Of Common Stock
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us-gaap Payments For Repurchase Of Common Stock
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us-gaap Payments Of Dividends Common Stock
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us-gaap Payments Of Stock Issuance Costs
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us-gaap Payments To Acquire Real Estate
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CY2016Q4 us-gaap Preferred Stock Shares Authorized
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1087000 USD
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5412000 USD
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us-gaap Profit Loss
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us-gaap Proceeds From Issuance Of Common Stock
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us-gaap Proceeds From Long Term Lines Of Credit
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CY2016Q4 us-gaap Real Estate Investment Property Accumulated Depreciation
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CY2017Q3 us-gaap Real Estate Investment Property Accumulated Depreciation
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us-gaap Repayments Of Long Term Lines Of Credit
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us-gaap Repayments Of Long Term Lines Of Credit
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CY2016Q4 us-gaap Restricted Cash And Cash Equivalents
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us-gaap Revenues
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us-gaap Stock Redeemed Or Called During Period Value
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us-gaap Straight Line Rent
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CY2016Q4 us-gaap Taxes Payable Current And Noncurrent
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CY2016Q3 us-gaap Tenant Reimbursements
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us-gaap Tenant Reimbursements
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us-gaap Tenant Reimbursements
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CY2016Q3 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
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us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
16000 shares
CY2017Q3 us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
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us-gaap Weighted Average Number Diluted Shares Outstanding Adjustment
WeightedAverageNumberDilutedSharesOutstandingAdjustment
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CY2016Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
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CY2017Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
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CY2016Q3 us-gaap Weighted Average Number Of Shares Outstanding Basic
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us-gaap Concentration Risk Credit Risk
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-align:left;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;font-style:italic;font-weight:bold;">Concentration of Credit Risk and Significant Leases</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">As of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, the Company had cash on deposit, including restricted cash, in certain financial institutions that had deposits in excess of current federally insured levels; however, the Company has not experienced any losses in such accounts. The Company limits its cash investments to financial institutions with high credit standing; therefore, the Company believes it is not exposed to any significant credit risk on its cash deposits. To date, the Company has experienced no loss or lack of access to cash in its accounts. </font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">As of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, the Company owned real estate investments in </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">36</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> MSAs, </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">two</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> of which accounted for 10.0% or more of contractual rental revenue. Real estate investments located in the Oklahoma City, Oklahoma MSA and the Atlanta-Sandy Springs-Roswell, Georgia MSA accounted for approximately </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">10.5%</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> and </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">10.0%</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, respectively, of contractual rental revenue for the </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">nine months</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> ended </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">.</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">As of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, the Company had </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">no</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> exposure to tenant concentration that accounted for 10.0% or more of rental revenue.</font></div></div>
us-gaap Nature Of Operations
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:0px;padding-top:18px;text-align:left;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;font-weight:bold;">Organization and Business Operations</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;font-style:normal;font-weight:bold;text-decoration:none;"> </font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">Carter Validus Mission Critical REIT II, Inc., or the Company, is a Maryland corporation that was formed on January&#160;11, 2013. The Company elected to be taxed as a real estate investment trust, or a REIT, under the Internal Revenue Code of 1986, as amended, for federal income tax purposes, on September 11, 2015. Substantially all of the Company&#8217;s business is conducted through Carter Validus Operating Partnership II, LP, a Delaware limited partnership, or the Operating Partnership, formed on January&#160;10, 2013. The Company is the sole general partner of the Operating Partnership and Carter Validus Advisors II, LLC, or the Advisor, is the special limited partner of the Operating Partnership. </font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">The Company is offering for sale a maximum of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$2,350,000,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> in shares of common stock, or the maximum offering amount, consisting of up to </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$2,250,000,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> in shares in its primary offering and up to </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$100,000,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> in shares of common stock to be made available pursuant to the Company&#8217;s distribution reinvestment plan, or the DRIP, on a &#8220;best efforts&#8221; basis, or the Initial Offering, pursuant to a registration statement on Form S-11, or the Registration Statement, filed with the Securities and Exchange Commission, or the SEC, under the Securities Act of 1933, as amended, or the Securities Act, which was declared effective on May 29, 2014. As of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, the Company was offering Class&#160;A shares, Class I shares and Class T shares of common stock, in any combination with a dollar value up to the maximum offering amount in the Initial Offering. </font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">On May 1, 2017, the Company filed a registration statement on Form S-11, or Follow-On Registration Statement, under the Securities Act to register a proposed follow-on offering, or the Follow-On Offering. On October 30, 2017, the Company filed a pre-effective amendment to the Follow-On Registration Statement to (i) register a maximum of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$1,000,000,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> of shares of Class A, Class I and Class T common stock pursuant to the primary offering of the Follow-On Offering and (ii) remove the DRIP from the Follow-On Registration Statement. Accordingly, pursuant to Rule 415 promulgated under the Securities Act, the Company extended the Initial Offering until the earlier of the SEC effective date of the Follow-On Offering or November 24, 2017. The Company has </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">no</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">t issued any shares in connection with the Follow-On Offering as it has not been declared effective by the SEC. </font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">On October 13, 2017, the Company filed a Registration Statement on Form S-3, or the DRIP Registration Statement, under the Securities Act to register up to </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$100,000,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> of shares of Class A, Class I and Class T common stock to be offered pursuant to the DRIP after the termination of the Initial Offering. The Company intends to continue to offer shares of common stock in the Initial Offering until November 24, 2017; however, it may terminate the Initial Offering prior to November 24, 2017 and commence offering shares of common stock pursuant to the Follow-On Offering and DRIP Registration Statement. The Company's board of directors may revise the termination date of the Initial Offering as necessary in its discretion.</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">As of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, the Company had issued approximately </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">113,499,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> shares of Class&#160;A, Class I and Class T common stock (including shares of common stock issued pursuant to the DRIP) in the Initial Offering, resulting in receipt of gross proceeds of approximately </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$1,111,417,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, before selling commissions and dealer manager fees of approximately </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$85,508,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> and other offering costs of approximately </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$21,875,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">. As of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, the Company had approximately </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">$1,238,583,000</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> in Class&#160;A shares, Class I shares and Class T shares of common stock remaining in the Initial Offering.</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">Substantially all of the Company&#8217;s business is managed by the Advisor. Carter Validus Real Estate Management Services&#160;II, LLC, or the Property Manager, an affiliate of the Advisor, serves as the Company&#8217;s property manager. The Advisor and the Property Manager have received, and will continue to receive, fees for services related to the acquisition and operational stages. The Advisor will also be eligible to receive fees during the liquidation stage. SC Distributors, LLC, an affiliate of the Advisor, or the Dealer Manager, serves as the dealer manager of the Initial Offering. The Dealer Manager has received, and will continue to receive, fees for services related to the Initial Offering.</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">The Company was formed to invest primarily in quality income-producing commercial real estate, with a focus on data centers and healthcare properties, preferably with long-term leases to creditworthy tenants, as well as to make real estate-related investments that relate to such property types, which may include equity or debt interests, including securities, in other real estate entities. The Company also may originate or invest in real estate-related notes receivable. The Company expects real estate-related notes receivable originations and investments to be focused on first mortgage loans, but also may include real estate-related bridge loans, mezzanine loans and securitized notes receivable. As of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">September&#160;30, 2017</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">, the Company owned </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">49</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> real estate investments, consisting of </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">66</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> properties, located in </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">36</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> metropolitan statistical areas, or MSAs, and </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">one</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> micropolitan statistical area, or &#181;SA.</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">Except as the context otherwise requires, &#8220;we,&#8221; &#8220;our,&#8221; &#8220;us,&#8221; and the &#8220;Company&#8221; refer to Carter Validus Mission Critical REIT&#160;II, Inc., the Operating Partnership and all wholly-owned subsidiaries.</font></div></div>
us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-align:left;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;font-style:italic;font-weight:bold;">Reclassifications</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">Certain prior period amounts have been reclassified to conform to the current financial statement presentation, with no effect on the Company&#8217;s&#160;condensed consolidated&#160;financial position or results of operations.</font></div></div>
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:0px;padding-top:8px;text-align:left;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;font-style:italic;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;padding-top:8px;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">The preparation of the </font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;">condensed consolidated</font><font style="font-family:Times New Roman;font-size:10pt;color:#000000;"> financial statements and accompanying notes in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates are made and evaluated on an ongoing basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates.</font></div></div>

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