on december 22 , 2016 , pursuant to the merger agreement , global ii merged with and into the merger sub , at which time the separate existence of global ii ceased and we became the parent of the merger sub . in addition , pursuant to the merger agreement , global ii op , merged with our op , with our op being the surviving entity . we and global ii each were sponsored , directly or indirectly , by an affiliate of ar global which , through its affiliates , provide or provided asset management services to us and global ii pursuant to advisory agreements . see note 3 — merger transaction to our consolidated financial statements in this annual report on form 10-k. significant accounting estimates and accounting policies set forth below is a summary of the significant accounting estimates and accounting policies that management believes are important to the preparation of our financial statements . certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations , and require the application of significant judgment by our management . as a result , these estimates are subject to a degree of uncertainty . these significant accounting estimates and accounting policies include : revenue recognition our revenues , which are derived primarily from rental income , include rents that each tenant pays in accordance with the terms of each lease agreement and are reported on a straight-line basis over the initial term of the lease . since many of our leases provide for rental increases at specified intervals , straight-line basis accounting requires us to record a receivable and include in revenues unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease . for each new lease after acquisition , the commencement date is the date the tenant takes possession of the space . for a lease modification , the commencement date is the date the lease modification is executed . we defer the revenue related to lease payments received from tenants in advance of their due dates . when we acquire a property , the acquisition date for purposes of this calculation is the commencement date . 46 as of december 31 , 2018 and 2017 , cumulative straight-line rents receivable in our audited consolidated balance sheets were $ 47.2 million and $ 42.7 million , respectively . for the years ended december 31 , 2018 and 2017 , our rental revenue included impacts of unbilled rental revenue of $ 6.3 million and $ 10.5 million , respectively , to adjust contractual rent to straight-line rent . we regularly review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant 's payment history , the financial condition of the tenant , business conditions in the industry in which the tenant operates and economic conditions in the geographic area in which the property is located . in the event that the collectability of a receivable is in doubt , we record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our audited consolidated statements of operations . cost recoveries from tenants are included in operating expense reimbursement in the period that the related costs are incurred , as applicable . investments in real estate investments in real estate are recorded at cost . improvements and replacements are capitalized when they extend the useful life of the asset . costs of repairs and maintenance are expensed as incurred . we evaluate the inputs , processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition . if an acquisition qualifies as a business combination , the related transaction costs are recorded as an expense in the audited consolidated statements of operations . if an acquisition qualifies as an asset acquisition , the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets . in both a business combination and an asset acquisition , we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values . tangible assets may include land , land improvements , buildings , fixtures and tenant improvements . intangible assets or liabilities may include the value of in-place leases , above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics . in addition , any assumed mortgages receivable or payable and any assumed or issued non-controlling interests ( in a business combination ) are recorded at their estimated fair values . in allocating the fair value to assumed mortgages , amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows , which is calculated to account for either above- or below-market interest rates . in a business combination , the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain . in an asset acquisition , the difference between the acquisition price ( including capitalized transaction costs ) and the fair value of identifiable net assets acquired is allocated to the non-current assets . all acquisitions during the years ended december 31 , 2018 and 2017 were asset acquisitions . disposal of real estate investments representing a strategic shift in operations that will have a major effect on our operations and financial results are required to be presented as discontinued operations in our consolidated statements of operations . no properties were presented as discontinued operations as of december 31 , 2018 and 2017 . story_separator_special_tag the decrease in property operating expenses was due to increases during the year ended december 31 , 2018 in the average exchange rate for gbp to usd of 3.6 % and euro to usd of 4.5 % , when compared to the year ended december 31 , 2017 , partially offset by the impact of our net acquisition of 21 properties during the year ended december 31 , 2018 . during 2018 , we recognized bad debt expense of $ 0.8 million with respect to receivables , which primarily related to three properties in which leases were terminated during the fourth quarter of 2018 ( see the `` impairment charges and related lease intangible write-offs ” section below ) . during 2017 , we recognized bad debt expense of $ 1.2 million with respect to receivables , which primarily related to one of our tenants that vacated its space and ceased making rental payments . operating fees to related parties operating fees paid to related parties were $ 28.2 million and $ 24.5 million for the years ended december 31 , 2018 and 2017 , respectively . operating fees to related parties represent compensation to the advisor for asset management services as well as property management fees paid to the advisor and property manager , including amounts subsequently paid by the advisor and the property manager to the former service provider for our european investments , prior to the termination of the former service provider , effective in march 2018. our advisory agreement requires us to pay in cash a base management fee of $ 18.0 million per annum ( $ 4.5 million per quarter ) plus a variable base management fee based on net proceeds from equity raised by us and , if the applicable hurdles are met , incentive compensation , payable in cash and shares ( see note 11 - related party transactions to our consolidated financial statements included in this annual report on form 10-k for details ) . the increase to operating fees between the periods in part results from an increase of $ 1.9 million in the amount of the payments of the variable base management fee resulting from additional net proceeds of $ 171.5 million and $ 148.3 million during the years ended december 31 , 2018 and 2017 , respectively , from sales of equity securities in public offerings of series a preferred stock and common stock pursuant to our atm programs . the variable base management fee would also increase in connection with other offerings or issuances of equity securities . the increase from the prior-year period was also due to an increase in the property management fees incurred from our net acquisition of 21 properties during the year ended december 31 , 2018 . with respect to the third quarter of 2018 , the advisor was paid $ 0.4 million , in a quarterly installment , of incentive compensation due to the advisor having met the applicable hurdles . because , based on the calculation as of december 31 , 2018 the hurdles had not 50 been met , we recorded reversal of $ 0.4 million for incentive compensation previously recorded in the third quarter of 2018 , and as a result , no incentive compensation was earned for the year ended december 31 , 2018 . there was no incentive compensation earned during the year ended december 31 , 2017. our property manager is entitled to fees for the management of our properties . property management fees are calculated as a percentage of our gross revenues generated by the applicable properties . during the years ended december 31 , 2018 and 2017 , we paid property management fees of $ 5.0 million and $ 4.3 million , respectively . the property manager elected to waive $ 1.2 million of the property management fees for the year ended december 31 , 2017. no property management fees were forgiven for the year ended december 31 , 2018 . impairment charges and related lease intangible write-offs during the year ended december 31 , 2018 , certain related entity tenants in six of our properties affiliated by a common guarantor were in financial difficulties . as part of negotiations , we terminated the leases for the tenants of four of the properties . we expect to sell one of the terminated lease properties and evaluated it for impairment and concluded that the carrying amount of the property was in excess of its estimated fair value and recorded an impairment charge of $ 1.6 million . the three remaining terminated lease properties were leased to other tenants and the company wrote-off the related lease intangibles of $ 3.4 million associated with the original tenants . two of the tenants are continuing to use the remaining two properties and are current on their rent . based on expected future cash flows , we do not believe the five leased properties are impaired . acquisition , transaction and other costs we recognized $ 13.9 million of acquisition , transaction and other costs during the year ended december 31 , 2018 , primarily comprised of expenses incurred in connection with litigation related to the termination of the former service provider totaling $ 10.3 million , of which $ 7.4 million relates to a reserve recorded for the anticipated settlement of this litigation and $ 2.9 million relates to legal costs . in addition , acquisition , transaction and other costs for the year ended december 31 , 2018 included $ 1.6 million in fees associated with the exploration of a potential foreign equity offering , $ 1.3 million in various legal and professional fees related to financing activities and $ 0.7 million of other costs . we recorded $ 2.0 million of acquisition , transaction and other costs during the year ended december 31 , 2017 , which consisted of third-party professional fees relating to the merger , fees related to the novation of our derivative contracts

cash flows from operating activities during the year ended december 31 , 2018 , net cash provided by operating activities was $ 144.6 million . the level of cash flows provided by operating activities is driven by , among other things , rental income received , operating fees paid to related parties for asset and property management , and interest payments on outstanding borrowings . cash flows provided by operating activities during the year ended december 31 , 2018 reflect net income of $ 10.9 million , adjusted for non-cash items of $ 125.3 million ( primarily depreciation , amortization of intangibles , amortization of deferred financing costs , amortization of mortgage premium/discount , amortization of above- and below-market lease and ground lease assets and liabilities , bad debt expense , unbilled straight-line rent , and equity-based compensation ) . in addition , working capital items decreased operating cash flows by $ 2.3 million . during the year ended december 31 , 2017 , net cash provided by operating activities was $ 131.0 million . cash flows provided by operating activities during the year ended december 31 , 2017 reflect net income of $ 23.6 million , adjusted for non-cash items of $ 107.1 million ( primarily depreciation , amortization of intangibles , amortization of deferred financing costs , amortization of mortgage premium/discount , amortization of mezzanine discount , amortization of above- and below-market lease and ground lease assets and liabilities , bad debt expense , unbilled straight-line rent , and equity-based compensation ) and working capital items of $ 10.9 million . during the year ended december 31 , 2016 , net cash provided by operating activities was $ 114.4 million .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```cash flows from operating activities during the year ended december 31 , 2018 , net cash provided by operating activities was $ 144.6 million . the level of cash flows provided by operating activities is driven by , among other things , rental income received , operating fees paid to related parties for asset and property management , and interest payments on outstanding borrowings . cash flows provided by operating activities during the year ended december 31 , 2018 reflect net income of $ 10.9 million , adjusted for non-cash items of $ 125.3 million ( primarily depreciation , amortization of intangibles , amortization of deferred financing costs , amortization of mortgage premium/discount , amortization of above- and below-market lease and ground lease assets and liabilities , bad debt expense , unbilled straight-line rent , and equity-based compensation ) . in addition , working capital items decreased operating cash flows by $ 2.3 million . during the year ended december 31 , 2017 , net cash provided by operating activities was $ 131.0 million . cash flows provided by operating activities during the year ended december 31 , 2017 reflect net income of $ 23.6 million , adjusted for non-cash items of $ 107.1 million ( primarily depreciation , amortization of intangibles , amortization of deferred financing costs , amortization of mortgage premium/discount , amortization of mezzanine discount , amortization of above- and below-market lease and ground lease assets and liabilities , bad debt expense , unbilled straight-line rent , and equity-based compensation ) and working capital items of $ 10.9 million . during the year ended december 31 , 2016 , net cash provided by operating activities was $ 114.4 million .
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 Suspicious Activity Report : on december 22 , 2016 , pursuant to the merger agreement , global ii merged with and into the merger sub , at which time the separate existence of global ii ceased and we became the parent of the merger sub . in addition , pursuant to the merger agreement , global ii op , merged with our op , with our op being the surviving entity . we and global ii each were sponsored , directly or indirectly , by an affiliate of ar global which , through its affiliates , provide or provided asset management services to us and global ii pursuant to advisory agreements . see note 3 — merger transaction to our consolidated financial statements in this annual report on form 10-k. significant accounting estimates and accounting policies set forth below is a summary of the significant accounting estimates and accounting policies that management believes are important to the preparation of our financial statements . certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations , and require the application of significant judgment by our management . as a result , these estimates are subject to a degree of uncertainty . these significant accounting estimates and accounting policies include : revenue recognition our revenues , which are derived primarily from rental income , include rents that each tenant pays in accordance with the terms of each lease agreement and are reported on a straight-line basis over the initial term of the lease . since many of our leases provide for rental increases at specified intervals , straight-line basis accounting requires us to record a receivable and include in revenues unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease . for each new lease after acquisition , the commencement date is the date the tenant takes possession of the space . for a lease modification , the commencement date is the date the lease modification is executed . we defer the revenue related to lease payments received from tenants in advance of their due dates . when we acquire a property , the acquisition date for purposes of this calculation is the commencement date . 46 as of december 31 , 2018 and 2017 , cumulative straight-line rents receivable in our audited consolidated balance sheets were $ 47.2 million and $ 42.7 million , respectively . for the years ended december 31 , 2018 and 2017 , our rental revenue included impacts of unbilled rental revenue of $ 6.3 million and $ 10.5 million , respectively , to adjust contractual rent to straight-line rent . we regularly review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant 's payment history , the financial condition of the tenant , business conditions in the industry in which the tenant operates and economic conditions in the geographic area in which the property is located . in the event that the collectability of a receivable is in doubt , we record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our audited consolidated statements of operations . cost recoveries from tenants are included in operating expense reimbursement in the period that the related costs are incurred , as applicable . investments in real estate investments in real estate are recorded at cost . improvements and replacements are capitalized when they extend the useful life of the asset . costs of repairs and maintenance are expensed as incurred . we evaluate the inputs , processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition . if an acquisition qualifies as a business combination , the related transaction costs are recorded as an expense in the audited consolidated statements of operations . if an acquisition qualifies as an asset acquisition , the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets . in both a business combination and an asset acquisition , we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values . tangible assets may include land , land improvements , buildings , fixtures and tenant improvements . intangible assets or liabilities may include the value of in-place leases , above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics . in addition , any assumed mortgages receivable or payable and any assumed or issued non-controlling interests ( in a business combination ) are recorded at their estimated fair values . in allocating the fair value to assumed mortgages , amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows , which is calculated to account for either above- or below-market interest rates . in a business combination , the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain . in an asset acquisition , the difference between the acquisition price ( including capitalized transaction costs ) and the fair value of identifiable net assets acquired is allocated to the non-current assets . all acquisitions during the years ended december 31 , 2018 and 2017 were asset acquisitions . disposal of real estate investments representing a strategic shift in operations that will have a major effect on our operations and financial results are required to be presented as discontinued operations in our consolidated statements of operations . no properties were presented as discontinued operations as of december 31 , 2018 and 2017 . story_separator_special_tag the decrease in property operating expenses was due to increases during the year ended december 31 , 2018 in the average exchange rate for gbp to usd of 3.6 % and euro to usd of 4.5 % , when compared to the year ended december 31 , 2017 , partially offset by the impact of our net acquisition of 21 properties during the year ended december 31 , 2018 . during 2018 , we recognized bad debt expense of $ 0.8 million with respect to receivables , which primarily related to three properties in which leases were terminated during the fourth quarter of 2018 ( see the `` impairment charges and related lease intangible write-offs ” section below ) . during 2017 , we recognized bad debt expense of $ 1.2 million with respect to receivables , which primarily related to one of our tenants that vacated its space and ceased making rental payments . operating fees to related parties operating fees paid to related parties were $ 28.2 million and $ 24.5 million for the years ended december 31 , 2018 and 2017 , respectively . operating fees to related parties represent compensation to the advisor for asset management services as well as property management fees paid to the advisor and property manager , including amounts subsequently paid by the advisor and the property manager to the former service provider for our european investments , prior to the termination of the former service provider , effective in march 2018. our advisory agreement requires us to pay in cash a base management fee of $ 18.0 million per annum ( $ 4.5 million per quarter ) plus a variable base management fee based on net proceeds from equity raised by us and , if the applicable hurdles are met , incentive compensation , payable in cash and shares ( see note 11 - related party transactions to our consolidated financial statements included in this annual report on form 10-k for details ) . the increase to operating fees between the periods in part results from an increase of $ 1.9 million in the amount of the payments of the variable base management fee resulting from additional net proceeds of $ 171.5 million and $ 148.3 million during the years ended december 31 , 2018 and 2017 , respectively , from sales of equity securities in public offerings of series a preferred stock and common stock pursuant to our atm programs . the variable base management fee would also increase in connection with other offerings or issuances of equity securities . the increase from the prior-year period was also due to an increase in the property management fees incurred from our net acquisition of 21 properties during the year ended december 31 , 2018 . with respect to the third quarter of 2018 , the advisor was paid $ 0.4 million , in a quarterly installment , of incentive compensation due to the advisor having met the applicable hurdles . because , based on the calculation as of december 31 , 2018 the hurdles had not 50 been met , we recorded reversal of $ 0.4 million for incentive compensation previously recorded in the third quarter of 2018 , and as a result , no incentive compensation was earned for the year ended december 31 , 2018 . there was no incentive compensation earned during the year ended december 31 , 2017. our property manager is entitled to fees for the management of our properties . property management fees are calculated as a percentage of our gross revenues generated by the applicable properties . during the years ended december 31 , 2018 and 2017 , we paid property management fees of $ 5.0 million and $ 4.3 million , respectively . the property manager elected to waive $ 1.2 million of the property management fees for the year ended december 31 , 2017. no property management fees were forgiven for the year ended december 31 , 2018 . impairment charges and related lease intangible write-offs during the year ended december 31 , 2018 , certain related entity tenants in six of our properties affiliated by a common guarantor were in financial difficulties . as part of negotiations , we terminated the leases for the tenants of four of the properties . we expect to sell one of the terminated lease properties and evaluated it for impairment and concluded that the carrying amount of the property was in excess of its estimated fair value and recorded an impairment charge of $ 1.6 million . the three remaining terminated lease properties were leased to other tenants and the company wrote-off the related lease intangibles of $ 3.4 million associated with the original tenants . two of the tenants are continuing to use the remaining two properties and are current on their rent . based on expected future cash flows , we do not believe the five leased properties are impaired . acquisition , transaction and other costs we recognized $ 13.9 million of acquisition , transaction and other costs during the year ended december 31 , 2018 , primarily comprised of expenses incurred in connection with litigation related to the termination of the former service provider totaling $ 10.3 million , of which $ 7.4 million relates to a reserve recorded for the anticipated settlement of this litigation and $ 2.9 million relates to legal costs . in addition , acquisition , transaction and other costs for the year ended december 31 , 2018 included $ 1.6 million in fees associated with the exploration of a potential foreign equity offering , $ 1.3 million in various legal and professional fees related to financing activities and $ 0.7 million of other costs . we recorded $ 2.0 million of acquisition , transaction and other costs during the year ended december 31 , 2017 , which consisted of third-party professional fees relating to the merger , fees related to the novation of our derivative contracts

