Quarterly report pursuant to Section 13 or 15(d)

Real Estate and Intangible Assets

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Real Estate and Intangible Assets
 3 Months Ended
Mar. 31, 2021
Real Estate [Abstract]  
Real Estate and Intangible Assets Real Estate and Intangible Assets
Real Estate

The following table sets forth the components of our investments in real estate as of March 31, 2021 and December 31, 2020, excluding real estate held for sale as of December 31, 2020 (dollars in thousands):
 
March 31, 2021 December 31, 2020
Real estate:
Land (1) $ 143,559  $ 142,853 
Building and improvements 930,480  916,601 
Tenant improvements 69,921  69,229 
Accumulated depreciation (240,351) (228,468)
Real estate, net $ 903,609  $ 900,215 
(1)This amount includes $4,436 of land value subject to land lease agreements which we may purchase at our option for a nominal fee.

Real estate depreciation expense on building and tenant improvements was $10.7 million and $9.0 million for the three months ended March 31, 2021 and 2020, respectively.
Acquisitions

We acquired one property during the three months ended March 31, 2021, and five properties during the three months ended March 31, 2020. The acquisitions are summarized below (dollars in thousands):

Three Months Ended Aggregate Square Footage Weighted Average Lease Term Aggregate Purchase Price Aggregate Capitalized Acquisition Costs
March 31, 2021 (1) 180,152  14.2 years $ 11,146  $ 146  (3)
March 31, 2020 (2) 890,038  14.8 years $ 71,965  $ 255  (3)
(1)On January 22, 2021, we acquired a 180,152 square foot property in Findlay, Ohio for $11.1 million. The property is fully leased to one tenant for 14.2 years.
(2)On January 8, 2020, we acquired a 64,800 square foot property in Indianapolis, Indiana for $5.3 million. The property is leased to three tenants, with a weighted average lease term of 7.2 years. On January 27, 2020, we acquired a 320,838
square foot, three-property portfolio in Houston, Texas, Charlotte, North Carolina, and St. Charles, Missouri for $34.7 million. The portfolio has a weighted average lease term of 20.0 years. On March 9, 2020, we acquired a 504,400 square foot property in Crandall, Georgia, for $32.0 million. This property is fully leased to one tenant for 10.5 years.
(3)During the three months ended March 31, 2021 and 2020, we capitalized $0.1 million and $0.3 million, respectively, of acquisition costs.

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the three months ended March 31, 2021 and 2020, respectively, as follows (dollars in thousands):

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
Acquired assets and liabilities Purchase price Purchase price
Land $ 258  $ 7,296  (1)
Building 8,759  54,000 
Tenant Improvements 88  1,285 
In-place Leases 817  4,442 
Leasing Costs 803  4,261 
Customer Relationships 294  2,223 
Above Market Leases 127  210  (2)
Below Market Leases —  (1,752) (3)
Total Purchase Price $ 11,146  $ 71,965 
(1)This amount includes $2,711 of land value subject to a land lease agreement, which we may purchase for a nominal fee.
(2)This amount includes $53 of loans receivable included in Other assets on the condensed consolidated balance sheets.
(3)This amount includes $62 of prepaid rent included in Other liabilities on the condensed consolidated balance sheets.

Future Lease Payments

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the nine months ending December 31, 2021 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year Tenant Lease Payments
Nine Months Ending 2021 $ 84,350 
2022 106,492 
2023 99,927 
2024 91,890 
2025 85,229 
2026 76,057 
Thereafter 261,017 
$ 804,962 

In accordance with the lease terms, substantially all operating expenses are required to be paid by the tenant directly, or reimbursed to us from the tenant; however, we would be required to pay operating expenses on the respective properties in the event the tenants fail to pay them.

Lease Revenue Reconciliation

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three months ended March 31, 2021 and 2020, respectively (dollars in thousands):
For the three months ended March 31,
(Dollars in Thousands)
Lease revenue reconciliation 2021 2020 $ Change % Change
Fixed lease payments $ 30,757  $ 29,479  $ 1,278  4.3  %
Variable lease payments 3,920  4,140  (220) (5.3) %
$ 34,677  $ 33,619  $ 1,058  3.1  %

Intangible Assets

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of March 31, 2021 and December 31, 2020, excluding real estate held for sale as of December 31, 2020 (dollars in thousands):

March 31, 2021 December 31, 2020
Lease Intangibles Accumulated Amortization Lease Intangibles Accumulated Amortization
In-place leases $ 100,470  $ (56,983) $ 99,254  $ (54,168)
Leasing costs 75,310  (39,751) 73,707  (37,801)
Customer relationships 68,851  (33,840) 68,268  (31,881)
$ 244,631  $ (130,574) $ 241,229  $ (123,850)
Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion
Above market leases $ 15,203  $ (10,883) $ 15,076  $ (10,670)
Below market leases and deferred revenue (39,421) 19,295  (38,319) 17,686 

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $6.0 million and $5.1 million for the three months ended March 31, 2021 and 2020, respectively, and is included in depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to above-market lease values was $0.2 million and $0.2 million for the three months ended March 31, 2021 and 2020, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income. Total amortization related to below-market lease values was $1.6 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the three months ended March 31, 2021 and 2020, respectively, were as follows:

Intangible Assets & Liabilities 2021 2020
In-place leases 14.2 16.3
Leasing costs 14.2 16.3
Customer relationships 19.2 19.5
Above market leases 14.2 18.0
Below market leases 0.0 14.2
All intangible assets & liabilities 15.4 16.9